If a consumer is in default, the creditor must inform him in writing of his delay. It is practically a letter of formal notice. However, the notice must do more: the lender must suggest to the consumer that the consumer return the credit agreement to a debt advisor, among other things, to resolve the dispute or agree on a plan to update payments. `5. Where a credit agreement within the meaning of this Section is unlawful, a court shall, notwithstanding any other law or provision contrary to a contract, make a fair and equitable order, including, but not limited to, an order that: (a) the credit agreement is void from the date of conclusion of the contract.` Credit agencies play an important role. For example, they provide credit providers with information on the creditworthiness of consumers. This information could, of course, be detrimental to consumers. Credit agencies are therefore required to check with other sources whether the information provided to them by credit providers is correct. Consumers have the right to have information about voided judgments removed (deleted) from credit bureau records. Similarly, a consumer who has fulfilled all his obligations in the context of a debt restructuring has the right to withdraw from those records that there has already been a debt restructuring. A much larger number of applications for default judgment on credit agreements now have to be referred to a judge[16] instead of being dealt with by the registrar. This will significantly increase the workload of judges and could lead to much more time in enforcement proceedings, which would lead to frustration for credit providers. A credit agreement can only be declared reckless if it is established that the consumer is over-indebted.

If the debt advisor finds that the consumer is not over-indebted, but considers that one or more credit agreements are reckless, these contracts cannot be declared reckless. Lenders can therefore continue to enforce loan agreements that are indeed reckless, but they do not have to be officially declared reckless. The law does not prescribe who can obtain or be denied credit (apart from general norms of discrimination in terms of race, sex, creed, etc.). It also doesn`t regulate the interest rates a lender can charge. Over-indebtedness is often a catastrophic consequence of high borrowing costs. Levenstein summarizes this state of affairs: Credit agreements in South Africa are contracts or contracts in South Africa in which payment or repayment by one party (the debtor) to another (the creditor) is deferred. This entry deals with the fundamental elements of loan agreements as defined in the National Credit Act and the consequences of entering into a loan agreement in South Africa. [1] With respect to the NCA, a contract constituting a credit agreement must be lent money, the payment of an amount owed by one person to another person and interest must be charged, since interest is the cost of the privilege to lend money. The ANC declares that it applies to any credit agreement entered into or in force in South Africa, unless an exclusion applies.

An illegitimate loan is not the same as a predatory loan which, although exploitative, may not be illegal. Before entering into a credit agreement, the creditor must submit to the consumer, free of charge, a declaration and an offer in the form prescribed by the rules (Form 20 of the Regulation, in the case of small credit agreements). No agreement will be reached at this time; The consumer does not have to sign or pay any fees. This is a new evolution of the law to protect consumers. This document must include the financial details of the proposed agreement (such as the amount of credit granted, the number and amount of payments payable, interest and other fees, the deposit required and credit insurance). Consumers must accept or reject the offer within five days to give them the opportunity to seek better or cheaper loans. Once the consumer has accepted the offer, the credit agreement can be concluded himself. Unsecured monetary loans are usually smaller monetary loans (microcredits) that are repayable in installments, with the lender not receiving collateral to repay the debt. Microcredits as a category of NCR generally attract lenders who can borrow up to R8,000 for up to 6 months.

Sections 40 and 89 of the ESA also provide that an unregistered lender may not offer, provide or renew loans. A lender must be registered at the time of entering into a loan agreement. In the absence of such registration, a credit agreement may be declared illegal and void. If a credit agreement is illegal despite any other legislation or provision contrary to a contract, a court must make a fair and equitable order, including but not limited to an order to cancel the credit agreement from the date it was entered into. It is quite simple for loans to cause financial difficulties and destroy the assets of a household. Taking out additional loans to repay existing loans can lead people into a spiral of debt that can be difficult to escape. Over-indebtedness has a negative effect on families and, in some extreme cases, has even led to family suicides. Over-indebtedness continues to affect the workplace, can lead to demotivation, absenteeism and even theft. .