Banks agree on debt review termination and enforcement moratorium

In an attempt to regularise the position of part paying consumers under debt review without any consent or court order, the NCR embarked in discussions with the Banking Industry to find a solution to these cases with a specific emphasis on mortgages.

We recognise the challenges with regard to terminations including different legal interpretations on whether banks could terminate the debt review process and begin the process of attaching consumer’s assets while the matter has been placed on the court roll. We further recognise the impact that this is having on consumers’ mortgages. In this regard, the NCR has approached the High Court for a declaratory order which we hope will provide much needed clarity on the issue.

The four major banks (ABSA, FRB, Nedbank and Standard Bank) have agreed on the terms of a conditional moratorium on termination of debt review and debt enforcement for consumers that are under debt counselling and have mortgages on their homes, where these debt counselling matters have not been resolved through court orders or agreements. The moratorium is effective from 06 December 2010.

The aim of the moratorium is to as far as possible enable people who are in this backlog of unresolved debt counselling matters to retain their homes pending finalization of their unresolved debt counselling applications through consent agreements or court orders.

In terms of the moratorium available for debt counselling applications lodged up to 30 November 2010, the banks have agreed to not proceed with the termination of debt counselling when permitted under the National Credit Act and enforcement of the credit agreements, but to allow time for the matters to be resolved.

In order to qualify for the moratorium the consumers will have to at present already be making certain minimum payments on their mortgage and other credit agreements and these payments will have to meet or exceed certain levels by 31 March 2010 (if currently below these levels).

Thereafter, provided these payments and other obligations are met, the consumers and their debt counsellors will be allowed time to finalize these matters through consent (utilizing the new consent rules for debt restructuring agreed by the industry) or through a court decision, until 30 June 2011.

Consumers (and their debt counsellors) are encouraged to immediately contact their mortgage bank to establish whether they can qualify and what the conditions of the moratorium are to enable them to suspend any termination and enforcement action that may already be under way which could cost them their homes.

The banks can be contacted on the following numbers:

o ABSA: 0861 005 901

o First Rand Bank: FNB: 0860 111 005 & Wesbank 0861 288 272

o Nedbank: 0860 109 279

o Standard Bank: 0860 439 770

Consumers can also contact the National Debt Mediation Association on 0861 116 362 for advice and assistance.