If the proceeds of the sale are not sufficient to settle the account, the creditor can go to court to recover the remaining balance owed. This applies to staggered contracts, secured credit or leasing. Surprisingly, there is no mortgage agreement on this list. This implies that the mortgage (a bank, usually) can only rely on the proceeds of the sale of the property to pay the account – even if that is not enough, and even if the Mortgagor (the debtor) is very rich and has other assets that could be added. The National Credit Act is a complex and time-consuming law that attempts to regulate precisely every consumer credit sector. The final provisions of the Act will come into force on June 1, 2007. The Act repealed the Usury Act[2] and the Credit Agreements Act[3] and bears little resemblance to these statutes. It`s a clear break with the past. All consumer credit law is included in the law applicable to all credit contracts and credit providers.
Auxiliary credit contracts are not covered by the definition of credit contracts in the act. Section 5 defines the limited provisions of the law that apply to them. The 2004 Ministry of Commerce and Industry policy framework describes appropriations as « a double-edged sword »: the agreement identified capital, interest at 18%, deferred payments, collection fees to be collected and non-payment that could trigger disputes with criminal costs between lawyer and client. This is not comparable, for example, to a family member with no commercial interest and no notion of a penalty dispute. Over-indebtedness is often a disastrous consequence of the high cost of credit. Levenstein summarizes this situation: secured bank loans, credit card accounts or cheque accounts fall under the « credit facility » category. The maximum interest rate is also linked to the SARB Bank Repurchase Rate and is currently 29.8 per cent per annum. If a credit contract is found to be illegal, a court must order that it be a credit contract when it provides for a deferral or delay in payment and a commission or interest is collected for the deferred payment. The law does not require a credit contract to be signed in writing and by both parties, even though this is implicit in the law as a whole.
A credit contract can be a credit facility, a credit transaction or a credit guarantee (or a combination of these). These three terms are defined in section 8 of the act. Every adult has the right to apply for a loan, but no one has the right to get credit. A lender may choose to refuse credit on reasonable business grounds, but should not unfairly discriminate against a consumer against other consumers on the basis of race, religion, pregnancy, marital status, ethnic or social origin, sex, sexual orientation, age, disability, culture, language Etc. A consumer may demand reasons for denial of credit that must be communicated in writing by the credit provider. Instead, consideration should be given to the parties, the nature of the agreement and the exclusions expressly provided for by the NCA. The law contains detailed provisions for bank statements. The regulations prescribed the form and content of declarations for small agreements. Credit providers are required to provide consumers with regular bank statements, usually once a month (but every two months for temperature purchase contracts).