Know your legal rights – they exist to protect you

2010-09-25 11:29

The National Credit Act 34 of 2005 came into effect last year. It sounds daunting, but it was brought about by government to assist you, the consumer.

The act sets out to regulate credit and help you to manage credit ­responsibly while making lending more transparent.

For example, when you apply for a loan the bank needs to make sure you will be able to repay it on time and in full. This is in your best ­interests and in the bank’s best ­interests.

To help you, your bank, microlender or other lender has the right to check your credit profile.

However, you too have rights concerning information and ­transparency:

    » You have the right to apply for credit.

    » If credit is declined you are entitled to know why your application was not approved.

    » If your credit rating is at fault the lender has to furnish you with the full details of the credit bureau.

    » You have a right to receive one free credit report from a credit bureau per year. You can challenge this record if it is not correct.

    » You can be compensated if the record is not corrected.

    » You can challenge unfair discrimination by lenders.

    » You have the right to confidentiality. Lenders must keep your information private and ­cannot disclose anything without your ­consent.

    » You have the right to receive documents that are set out in a language you can read and understand, using layman’s terms and no unnecessary technical, industry or legal ­jargon.

    » When considering a loan agreement you are entitled to a pre-agreement statement with all the terms and conditions, as well as a written quote which is valid for five days, which you may accept or reject.

    » When taking out a loan agreement, you can have six monthly statements delivered to you.

    » You may only be charged fees and charges that are stipulated in the act.

    » You can choose your own insurance.

    » If you cannot meet your repayment obligations you can make use of debt counselling services.

    » Once a judgment has been rescinded or you have made good on outstanding ­balances, a credit bureau has to update the information within 20 days.

The National Consumer Tribunal hears complaints from ­consumers about credit agreements and credit providers.

Which credit products are covered by the act?
The act covers products where payment is not made immediately and a charge, a fee or interest is payable.

These include instalment sale agreements, leases, ­overdrafts, credit cards, mortgages, ­secured loans and credit ­guarantees.

What if I have run up debts I cannot repay?
The act introduces debt counsellors as an intermediary between the lender and the borrower.

Consumers can apply to a debt counsellor to have their debts ­restructured if they have taken on too much debt.

Lenders must advise consumers to approach a debt counsellor when they run into repayment ­difficulties.

If you are over-indebted, a debt counsellor can recommend to a magistrates court that your debts be restructured to suit you and your creditors.

Note that if you are under debt counselling, you cannot borrow more money – you will not have ­access to any further credit.

What are my rights in terms of debt repayment?
Debtors have a right to query ­accounts if they feel a creditor or debt collector has charged them in error or defrauded them.

If, however, the debt is legal and valid, the debtor has a moral obligation to repay the debt.

If you appear in court for non-payment, you may raise the defence that a set period of time has passed and that, by law, you are no longer obliged to pay the debt or a debt that arose in the interim (like interest on a late payment).

In terms of South African law, a debt prescribes after three years (the period for a judgment debt is 30 years). Prescription was introduced to protect consumers against unscrupulous creditors who delay the recovery of debt to incur huge costs and interest. Clearly, this kind of unscrupulous lending is unfair to the consumer.

If the debtor acknowledges the debt in writing, verbally or by payment, prescription is interrupted and payment must be effected. So be careful what you sign.

Can a creditor debit my account before payday?
According to Shireen Miller of Imali Matters, if a debit order was the agreement method of payment, the credit provider must debit a consumer’s account on the date agreed upon in terms of the agreement between them.

If the date falls on a weekend or public holiday check what the terms are.

If a debit order is made on an incorrect date, it could be a mistake and you may submit a claim for bank charges. If, however, this ­happens again, you can approach the Banking Ombud if it is a bank problem or the Credit Ombud if a retailer is to blame.

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