Cape Town - The new credit act, which will soon be implemented, will not only tighten measures to grant credit but also offer more protection to consumers.
The National Credit Amendment Act, which was signed into law by President Jacob Zuma in May, is expected to be implemented by the National Credit Regulator later this month.
Debt Rescue CEO Neil Roets said in a statement on Tuesday that the act is going to have far-reaching positive effects for deeply indebted consumer.
"We are particularly pleased the act has taken a strong position on the collection of prescribed debt making it illegal to try and collect it or to sell it to a third party collection agency as was the case in the past."
He said debt collectors often used questionable methods to collect these old debts including harassing consumers.
"We are also delighted that the new act provides consumers with full legal protection during the time that a debt review application has been lodged with the court until the date that a judgement has been given."
Roets added that the most crucial aspect of the act is that creditors will have to perform an affordability assessment to verify that the lender can afford the loan or credit that they are applying for.
"If it can be proven that a creditor extended credit recklessly, the loan may be declared null and void," he said.