Section 79(1) of the National Credit Act reads: “A consumer is over-indebted if the preponderance of available information at the time a determination is made indicates that the particular consumer is or will be unable to satisfy in a timely manner all the obligations under all the credit agreements to which the consumer is a party, having regard to that consumer’s-
(a) financial means, prospects and obligations; and
(b) probable propensity to satisfy in a timely manner all the obligations under all the credit agreements to which the consumer is a party, as indicated by the consumer’s history of debt repayment.”
This means that in terms of Consumer Credit Law, over indebtedness is a status that is ascribed to a person. For a person to be in a state of over indebtedness, they must be unable to pay their credit obligations or there must be a probability that such a person will not satisfy all their credit obligations in time, all of these judged against all the information available regarding that person’s financial means, prospects and obligations.
However, the situation is not all bleak for individuals who are over indebted. It is essential to remember that no individual is automatically over indebted, a determination ought to be made to establish over indebtedness.
To relieve themselves from over indebtedness, an individual may apply to court in terms of section 85 of the Act, institute debt review processes in terms of section 86 or cause a magistrate court to rearrange their debt obligations under section 87 of the Act. In all circumstances, a person would need to give careful consideration to their circumstances. This would allow them to gauge which process under the National Credit Act is most applicable and to know whether they need to spend further on fees seeking professional assistance.