Nicolette Dirk, finance writer, Justmoney.co.za
There are many consumers who are still confused about how the credit amnesty will affect their credit records.
The removal of adverse consumer credit information and information relating to paid up judgments, commonly referred to as the ‘credit information amnesty’, came into effect on 1 April 2014.
This meant that from 1 April 2014, all registered credit bureaus have to remove adverse consumer credit information on their systems for a period of two months until the end of May 2014.
But Nomsa Motshegare, CEO of the National Credit Regulator (NCR), said some consumers believe credit amnesty will wipe out their debt and they are no longer obligated to pay it.
“There has been confusion and misconceptions around the process but consumers are still liable to pay their debts. We have also found that some consumers don’t know where and how to get a copy of their credit reports,” said Motshegare.
What credit information will be removed?
According to Motshegare, subjective classifications of consumer behaviour such as, delinquent, default, slow paying, absconded or not contactable will be removed.
Enforcement action taken by credit providers including classifications such as, handed over for collection or recovery, legal action or write off will also be removed.
The details of disputes lodged by consumers, irrespective of the outcome of such disputes, and adverse consumer credit information contained in the payment profile will also be removed.
“Paid up judgments, which means civil court judgment debts, including default judgments where the consumer has settled the judgment debt, should also be removed from the credit bureau records from 1 April 2014,” said Motshegare.
Where a consumer has paid the judgment debt, the credit provider must notify the credit bureau of this within seven days of receiving the payment. The credit bureau must remove that judgment from the consumer’s credit record within seven days of receiving proof of payment. The consumer no longer has to apply to a court to rescind the judgment so that it can be removed from his/her credit record. Motshegare said this will save consumers a lot of money that they could have paid to lawyers.
Dean Randall, debt negotiating manager at DebtBusters, said that some credit providers are also misinterpreting the amnesty. Because they believe they will not have any access to any of the consumer’s credit profiles, they are becoming stricter when giving people credit.
According to Randall, the information of accounts in arrears will still show up, until you pay up your debt.
“The credit information amnesty was created to assist people, who managed to pay up their debt, to not be restricted by court orders and judgments, when they want to have access to good debt like a home loan,” said Randall.
Common misconceptions about credit information amnesty
People assume that their payment profile will be removed and they will start on a clean slate. According to the NCR the payment profile will remain on the consumer’s credit bureau records.
Some consumers also think that when the credit bureaus have removed the consumer’s adverse or paid up judgment/s, their name will no longer appear at the credit bureaus.
“Consumers must realise that every person who has an account anywhere in South Africa with a credit or service provider, who makes use of credit bureau services, will find the information about the account is recorded with a credit bureau. This is irrespective of whether the account is paid regularly or not,” said the NCR.
Some people also believe that after the information is removed, they will automatically get credit.
But according to the NCR credit providers are required to conduct an affordability assessment before granting credit.
You can contact the NCR or the Credit Ombud for any clarity or assistance on:
• Credit Ombud – 0861 662 837
• National Credit Regulator – 0860 627 627
If you are struggling with debt, get help with Justmoney’s debt counseling partner, DebtBusters by clicking here