# Regulatory Compliance Category > National Credit Act Forum >  Lets hope court grant Declaratry Order

## Reagen

:Smile: Debtors left in limbo due to the deafening silence of the NCA on the court procudure in obtaining consent could soon be over. The NCR will approach the High Court to provide clarity on the interpretation of the Debt Review provisions in the NCA.

The application will be heard in the Pretoria High Court from March 2 until March 5. Its rather sad that all four major banks opposed the application, as that NCR is of the view that the process should be as inexpensive, expeditious and informal as possible. The silence of the NCA on the process leads Magistrates to refer to the Magistrates Court Act, which allows for a rule 55 application, which can be long and drwan out and very expensive, even more so for someone that is over-indebted.

Lets stay positive tho

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## Dave A

What I don't get is surely the national credit regulator is supposed to set the rules and standards via regulations. This application is not only passing the buck, it intimates that either the thinking behind the act was flawed in this aspect, or the NCR is incompetent.

Did they expect debt counsellors to just pull rabbits out of thin air?
And how many debtors seeking relief are being honest in their declarations?

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## Reagen

Currently 43000 consumers applied for Debt Review, the NCR is of the view that there is between 600 000 & 1 200 00 million consumers over-indebted. The levelof indebtedness in currently measured at 78%, an enormous percentage!!

Debt Counsellors are thus provided with the task to Restructure, which is often IMPOSSIBLE unless the interest rate is brought down to 0%

We have found some positive consumers who are open with there finances, sadly not all of them. 

As things stand now, the NCR had no other option to approach the court for clarification as amendments to the Act and Regulation might take 2 years even though its a crisis.

Refering to Mr Mboweni( Reserve bank governer) we would see relief in plus minus 4 years. :Fence:  :Fence:

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## Dave A

> Debt Counsellors are thus provided with the task to Restructure, which is often IMPOSSIBLE unless the interest rate is brought down to 0%


Then the debt counsellor should simply advise that restructuring cannot solve the problem. That way normal legal processes such as liquidation and insolvency can continue.

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## Reagen

Agreed, on the other other hand, what will your view be on the fact that an insolvency order is rather expensive if the consumer makes application together that our courts are currently looking for 10cents in a R1 in terms of assets, furthermore, legal cost can amount to plus minus R20 000. Also consumers are hesitant to go that route as they will loose everything and feel that they will rather see it through and hope for a change of circumstamces.

Creditors are currently hesitant aswell to apply for an insolvency order as the cost will be on them if the order is not granted or postponed. Its really tricky at this stage.

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## Dave A

It always has been tricky when it comes to making those decisions. 

Perhaps at the end of the day the NCA should be targetted at the "old" adminstration order level - where there is a prospect of rescue. 

Other than the reckless credit provisions, there was always little prospect of the NCA rescuing the parties where a debtor had dug a hole too deep to ever crawl back out.

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## Reagen

Yes Dave, reckless lending provisions in terms of sec 80 is relatively very good..i do have concerns though, that section 81(4) a complete defence to an allegation that a credit agreement is reckless if- the credit provider esthablishes that the consumer failed to fully and truthfully answer any request.

Dave this chats is really good.

Keep well :Smile:

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## Honeyman

I mentioned to Kagiso of the National Credit Regulator once that I think the NCA needs amended to allow attorneys and candidate attorneys automatically qualify as Debt Counsellors.  This would then allow for a holistic approach to the restructuring and the attorney can make all the applications required.  I really don't see why a whole new profession needed to be created when the course to qualify costs thousands of rands so there is still a deficit of counsellors, and we have attorneys who are skilled in many of the tasks undertaken but can't legally carry out the task.

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## Dave A

A great point. But with the fee limits, would lawyers be interested?

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## Honeyman

In this economic downturn I think it would be a service attorneys were happy to offer but a lot of the actual work would probably be done by the Candidates and support staff.  

However, the benefits to the attorney would be great because currently if your client comes to you to say that they've received a Summons and you realise that they are probably over indebted, you simply cannot find a Debt Counsellor to initiate the enquiry and so halt the Court action.  

Also attorneys previously acted in Administration Order cases and that is a low income generator.

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## Sieg

While I was serving articles, my principal told me one day that my articles  (and hence my practical education as an attorney) would be radically incomplete unless I had also, during the course of my articles, attended to at least one Administration Order, from inception to finalization (i.e. termination of the Admin Order by the Court). I did one. It was a pain. But I am pleased to report that it was one of the (unfortunately) few Admin orders that were successful: my client paid all creditors in full plus interest,the firm made its (relatively small) fees and my principal was discharged from his duties as the administrator. My reward was to be taken to the local "club" to have a few drinks in celebration. I have never done an admin order since. 


Sieg

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## Brett Bentley

The judgment relating to the order referred to in this article has been handed down.

A summary of the judgment can be found at http://www.creditmanagement.co.za/?p=353 together with a link to the site where you can download the full judgment.

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Dave A (27-Aug-09)

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