Statutory analysis of debt relief measures for low-income earners in South Africa

Abstract

Debt relief is important in the current credit-driven society where consumers live off credit for their day-to-day needs in South Africa. Currently, there are three statutory debt relief measures at the disposal of insolvent debtors in South Africa. These are the sequestration proceedings in terms of the Insolvency Act, the administration order in terms of the Magistrates Courts Act, and the debt review in terms of the National Credit Act. The fourth debt relief measure, namely debt intervention, has recently been introduced by the National Credit Amendment Act but it has not yet come into place. The problem faced by low-income earners in South Africa is that the available debt relief measures are not viable and accessible to them. There is a multiplicity of regulators, entry requirements and decision making forums that are involved in the debt relief measures, thus making access to such measures difficult for low-income earners. This research addresses the strengths and weaknesses of sequestration proceedings, debt review, debt intervention and administration order with a view of promoting access to such debt relief measures by low-income earners. Moreover, this research intends to provide practical insights towards the progressive realisation of debt relief measures that are accessible and viable to low-income earners in South Africa. This, essentially, is done through a call for law reform of the debt relief sections in terms of the Insolvency Act, the Magistrates Courts Act, and the NCA in order to provide a more robust and accessible debt relief to help low-income earners in South Africa.