Cape Town – Credit bureaus have been inundated with calls from consumers since the implementation of the credit amnesty on April 1 2014.
Among the most frequently asked questions are:
1. How do I apply for amnesty?
It is not necessary to apply for amnesty. The terms of the credit amnesty will be applied automatically to anyone who has negative information or a paid-up judgment reflected on their credit reports prior to April 1 2014.
2. Why is a debt I incurred before 1 April still reflected on my credit report?
The credit amnesty does not remove a consumer’s obligation to repay a debt incurred prior to April 1 2014. All the amnesty has done is to remove the negative information that was reflected on consumers’ credit reports before April 1. In terms of the credit amnesty, consumers still have to repay all their debts.
3. What negative information was removed?
* Negative classifications of consumer behaviour, including: “delinquent”, “slow paying”, “default”, “absconded”, or “not contactable”.
* Negative classifications of enforcement actions, including: “handed over for collection or recovery”; “repossessed”, “revoked”, any “legal action”, or “write off” of the debt.
* All paid up civil court judgments where the consumer has settled the capital amount.
4. What is a default?
Credit information amnesty applies to two kinds of defaults: behavioural and enforcement. Behavioural defaults occur when the lender sends a letter of demand to an individual for unpaid debt. They can also occur when the lender is unable to contact the individual. Enforcement defaults occur when a debt is either written off or handed over to a third-party debt collector.
5. What is a judgment?
When a consumer falls into arrears with any payments owed, the creditor could issue summons against the consumer, for the recovery of that debt (the capital amount), plus legal costs and interest. If the consumer does not reply to the summons, the creditor may apply to the court for judgment by default. The court could then hand down a judgment, ordering the consumer to pay those amounts.
If the consumer does not pay as ordered, the creditor can ask the court to issue a warrant to attach the consumer’s property and sell it in settlement of that amount.
6. How does credit amnesty affect judgments?
If the consumer pays the capital amount back to the creditor, the judgment will be considered “paid up” and all information on the judgment will be removed from the consumer's credit record. Under the credit information amnesty, all paid up judgments are required to be removed from the credit bureau records on an on-going basis which will give consumers an incentive to pay off their debts. Currently, judgments are removed after five years, or earlier if rescinded by a court. The consumer will no longer need to go through a court process.
Source – Fin24