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How will the new Credit Act amendments affect my business?

Consumer credit up to R50 000 may now be extinguished.

The National Credit Amendment Bill was signed into law in August, and has polarised public opinion. From the perspective of small- and medium-sized companies, it may be bad news – here’s why.

Extinguishing debt

The Act provides a way for certain natural persons (i.e. individuals, not companies) to have their debt extinguished, provided that the person:

- earns R7 500.00 per month or less; or

- has been found to be critically indebted; or

- has a total unsecured debt of R50 000.00.

It is important to note that only natural persons may qualify to have their debt written off, and it doesn’t happen automatically – the debtor must make a debt intervention application.

More red tape

Practically, companies who have debts of this kind will have to go through more procedural litigation steps to recover the debt than previously, and face decreased chances of success.

Many businesses will likely be increasingly wary of granting credit to the above categories of consumers, potentially reducing the business’ competitiveness. One answer may be to require consumers to take out credit life insurance – which the Act regulates as well.

Offences and penalties

The Act creates further offences applicable to credit-providing companies. For example, where a company commits an offence, every director of the company who knowingly was a party to the contravention is guilty of an offence, and subject to the same penalties.

Penalties prescribed by the Act include 10% of the company’s annual turnover or R10 000 000, whichever is the greater; or a fine and/or imprisonment for up to 10 years.


Make sure that your credit applications and other documents and procedures for providing credit are compliant with the new Act. For more information, contact us at or (012) 004 1296.

Please note that this article represents a brief summary of credit law, at the time it was written. It is therefore meant for informative purposes only and does not constitute legal advice. For full legal advice on your commercial matter, please contact us to arrange a consultation.


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