Alternative Measures for the Discharge of Debts for Over-Indebted Persons under the Magistrates’ Courts Act 32 of 1944
Keywords:
over-indebted, debt discharge, creditors, administration order, natural person debtorsAbstract
Notably, over-indebted natural person debtors may utilise administration orders in terms of the Magistrates’ Courts Act 32 of 1944 (Magistrates’ Courts Act) to circumvent their over-indebtedness and get debt relief in South Africa. However, over-indebtedness is still very problematic in South Africa due to, inter alia, the lack of robust and comprehensive debt discharge measures for over-indebted persons. For instance, administration orders and debt review measures do not provide for the discharge of debts since they merely provide for debt-restructuring to enable the affected debtors to have some time to satisfy their creditors’ claims. This article provides an overview analysis of the administration order under the Magistrates’ Courts Act in order to explore its requirements, possible advantages and disadvantages as a debt relief measure in South Africa. The article also discusses the accessibility and viability of the administration order to low-income earners in South Africa. This is done to unpack the gaps and flaws of the administration order under the Magistrates’ Courts Act in order to recommend possible measures that could be adopted by the policy makers to enable the over-indebted persons to easily access and+ utilise it for debt relief in South Africa.
References
References
Archuleta, K.L. Dale, A. and Spann, S.M. (2013). “College Students and Financial Distress: Exploring Debt, Financial Satisfaction, and Financial Anxiety”. Journal of Financial Counseling and Planning, 24(2), pp. 50-62.
Asheela, N.V. (2012). The Advantage Requirement in Sequestration Applications: A Call for Relaxation. LLM-dissertation: University of Pretoria.
Boraine, A. (2003). “Some thoughts on the Reform of Administration Orders and Related Issues”. De Jure, 36, pp. 217-251.
Boraine, A., Van Heerden, C. and Roestoff, M. (2012). “A Comparison Between Formal Debt Administration and Debt Review – The Pros and Cons of these Measures and Suggestions for Law Reform (Part 1)”. De Jure, pp. 80-103.
Boraine, A. and Roestoff, M. (2002) “Fresh Start Procedures for Consumer Debtors in South African Bankruptcy Law”. International Insolvency Review, 11(1), pp. 1-11.
Boraine, A. & Roestoff, M. (2014). “Revisiting the State of Consumer Insolvency in South Africa after Twenty Years: The Courts’ Approach, International Guidelines and an Appeal for Urgent Law Reform (Part 2)”. THRHR, 77, pp. 527-546.
Boraine, A. & Van Heerden, C. (2010). “To Sequestrate or Not to Sequestrate in View of the National Credit Act 34 of 2005: A Tale of Two Judgments”. PELJ, 13(3), pp. 84-124.
Chitimira, H. & Magau, P. (2020). “An Analytical Precis of Debt Relief Measures under the Insolvency Act 24 of 1936”. EuroEconomica, 39(2), pp. 209-226.
Chitimira, H. & Magau, P. (2021). “Synoptical Analysis of Debt Relief Intervention Measures for Low-
Income Earners under the National Credit Amendment Act 7 of 2019”. IJEBL, 10, pp. 284-304.
Coetzee, H. (2015). A Comparative Reappraisal of Debt Relief Measures for Natural Person Debtors in South Africa. LLD-thesis: University of Pretoria.
Coetzee, H. (2018). “An Opportunity for No Income No Asset (NINA) Debtors to Get out of Check? – An Evaluation of the Proposed Debt Intervention Measure”. THRHR, 81, pp. 593-611.
Hamadziripi, F. & Chitimira, H. (2021). “The Socio-Economic Effects of the COVID-19 National Lockdown on South Africa and its Response to the COVID-19 Pandemic”. Acta Universitatis Danubius Juridica, 17(1), pp. 24-42.
Kelly-Louw, M. (2008). “The Prevention and Alleviation of Consumer Over-indebtedness”. SA Merc LJ, 20, pp. 200-226.
Leathern, R. (2018). Consideration of the Proposed Debt Intervention Procedure from a Debt Relief Perspective. LLM-dissertation: University of Pretoria.
Mabe, Z. (2017). “Notice of Intention to Surrender as an Abuse of the Sequestration Process: Nedbank Limited v Malan; In re: Ex Parte Application of Malan [2015] JOL 33458 (GP)”. THRHR, 80, pp. 695-703.
Mabe, Z. (2019). “Alternatives to Bankruptcy in South Africa that Provides for a Discharge of Debts: Lessons from Kenya”. PELJ, 22, pp. 1-34.
Magau, P.T. (2019). A Statutory Analysis of Debt Relief Measures for Low-Income Earners in South Africa. LLM dissertation: North-West University.
Manyuni, C. (2015). The Position of ‘Low Income Low Asset’ (LILA) Debtors in South Africa: The Need for Legislative Reform. LLM-dissertation: University of Kwa-Zulu Natal.
Malange, N.J. (2013). “The Impact of Administration Orders as a Redress Mechanism for Over-Indebted Consumers: A Critical Analysis” in Nejdet D et al Globalizing Businesses for the Next Century: Visualizing and Developing Contemporary Approaches to Harness Future Opportunities, pp. 624-630.
National Treasury Republic of South Africa (2020). Medium Term Budget Policy Statement 2020.
www.treasury.gov.za.
National Treasury Republic of South Africa (2020). 2021 Medium Term Expenditure Framework
Technical Guidelines. www.treasury.gov.za.
National Treasury Republic of South Africa (2020). Adjusted Estimates of National Expenditure
2020. www.treasury.gov.za.
National Treasury Republic of South Africa. (2020). Special Adjustment Budget Guidelines 2020.
www.treasury.gov.za.
Nel, J.M. (2006). An Analysis of the Legislative Mechanisms Available to Individual Debtors in terms of the South African Law. LLM-dissertation: University of South Africa.
Roestoff, M. & Coetzee, H. (2012). “Consumer Debt Relief in South Africa; Lesson from America and England and Suggestions for the Way Forward”. SA Merc LJ, 24, pp. 53-76.
Sharrock, R., Van Der Linde, K. & Smith, A. (2012). Hockly’s Insolvency Law. Cape Town: Juta & Co. Ltd.
Ssebagala, R.A. (2017). “Relieving Consumer Over-indebtedness in South Africa: Policy Reviews and Recommendations”. Journal of Financial Counselling and Planning, 28(2), pp. 235-246.
Theophilopoulos, C. Van Heerden, C. & Boraine, A. (2015). Fundamental Principles of Civil Procedure. Durban: LexisNexis.
Van Loggerenberg, D.E., Buckle, J. & Erasmus, H. (1997). Jones and Buckle: The Civil Procedure Practice of the Magistrates’ Courts in South Africa. 9th ed. Claremont: Juta & Co. Ltd.
World Bank, (2013). Insolvency and Creditor/Debtor Regimes Task Force Working Group on the Treatment of the Insolvency of Natural Persons Report on the Treatment of the Insolvency of Natural Persons.
Case Law
African Bank Ltd v Weiner 2005 (4) SA 363 (SCA) 366.
Bafana Finance Mabopane v Makwakwa 2006 (4) SA 581 (SCA) 583.
Cape Town Municipality v Dunne 1964 1 SA 741 (C).
Coetzee v Government of the Republic of South Africa; Matiso v Commanding Officer, Port Elizabeth Prison 1995 (4) SA 631 (CC).
Els v Els 1967 (3) SA 207 (T).
Ex parte August 2004 (3) SA 268 (W) 271.
Fortuin v Various Creditors 2004 (2) SA 570 (C) 573.
Hobson NO v Abib 1981 (1) SA 556 (N) 559-60.
Madari v Cassim 1950 (2) SA 35 (D) 38.
Mahomed v Lockhat Brothers & Co Ltd 1944 AD 230 241.
Weiner v Broekhuysen 2003 4 SA 301 (SCA) at 305E-F.
Legislation
Companies Act 71 of 2008.
Insolvency Act 24 of 1936.
Magistrates Courts Act 32 of 1944.
National Credit Act 34 of 2005.
National Credit Amendment Act 7 of 2019.
Archuleta, K.L. Dale, A. and Spann, S.M. (2013). “College Students and Financial Distress: Exploring Debt, Financial Satisfaction, and Financial Anxiety”. Journal of Financial Counseling and Planning, 24(2), pp. 50-62.
Asheela, N.V. (2012). The Advantage Requirement in Sequestration Applications: A Call for Relaxation. LLM-dissertation: University of Pretoria.
Boraine, A. (2003). “Some thoughts on the Reform of Administration Orders and Related Issues”. De Jure, 36, pp. 217-251.
Boraine, A., Van Heerden, C. and Roestoff, M. (2012). “A Comparison Between Formal Debt Administration and Debt Review – The Pros and Cons of these Measures and Suggestions for Law Reform (Part 1)”. De Jure, pp. 80-103.
Boraine, A. and Roestoff, M. (2002) “Fresh Start Procedures for Consumer Debtors in South African Bankruptcy Law”. International Insolvency Review, 11(1), pp. 1-11.
Boraine, A. & Roestoff, M. (2014). “Revisiting the State of Consumer Insolvency in South Africa after Twenty Years: The Courts’ Approach, International Guidelines and an Appeal for Urgent Law Reform (Part 2)”. THRHR, 77, pp. 527-546.
Boraine, A. & Van Heerden, C. (2010). “To Sequestrate or Not to Sequestrate in View of the National Credit Act 34 of 2005: A Tale of Two Judgments”. PELJ, 13(3), pp. 84-124.
Chitimira, H. & Magau, P. (2020). “An Analytical Precis of Debt Relief Measures under the Insolvency Act 24 of 1936”. EuroEconomica, 39(2), pp. 209-226.
Chitimira, H. & Magau, P. (2021). “Synoptical Analysis of Debt Relief Intervention Measures for Low-
Income Earners under the National Credit Amendment Act 7 of 2019”. IJEBL, 10, pp. 284-304.
Coetzee, H. (2015). A Comparative Reappraisal of Debt Relief Measures for Natural Person Debtors in South Africa. LLD-thesis: University of Pretoria.
Coetzee, H. (2018). “An Opportunity for No Income No Asset (NINA) Debtors to Get out of Check? – An Evaluation of the Proposed Debt Intervention Measure”. THRHR, 81, pp. 593-611.
Hamadziripi, F. & Chitimira, H. (2021). “The Socio-Economic Effects of the COVID-19 National Lockdown on South Africa and its Response to the COVID-19 Pandemic”. Acta Universitatis Danubius Juridica, 17(1), pp. 24-42.
Kelly-Louw, M. (2008). “The Prevention and Alleviation of Consumer Over-indebtedness”. SA Merc LJ, 20, pp. 200-226.
Leathern, R. (2018). Consideration of the Proposed Debt Intervention Procedure from a Debt Relief Perspective. LLM-dissertation: University of Pretoria.
Mabe, Z. (2017). “Notice of Intention to Surrender as an Abuse of the Sequestration Process: Nedbank Limited v Malan; In re: Ex Parte Application of Malan [2015] JOL 33458 (GP)”. THRHR, 80, pp. 695-703.
Mabe, Z. (2019). “Alternatives to Bankruptcy in South Africa that Provides for a Discharge of Debts: Lessons from Kenya”. PELJ, 22, pp. 1-34.
Magau, P.T. (2019). A Statutory Analysis of Debt Relief Measures for Low-Income Earners in South Africa. LLM dissertation: North-West University.
Manyuni, C. (2015). The Position of ‘Low Income Low Asset’ (LILA) Debtors in South Africa: The Need for Legislative Reform. LLM-dissertation: University of Kwa-Zulu Natal.
Malange, N.J. (2013). “The Impact of Administration Orders as a Redress Mechanism for Over-Indebted Consumers: A Critical Analysis” in Nejdet D et al Globalizing Businesses for the Next Century: Visualizing and Developing Contemporary Approaches to Harness Future Opportunities, pp. 624-630.
National Treasury Republic of South Africa (2020). Medium Term Budget Policy Statement 2020.
www.treasury.gov.za.
National Treasury Republic of South Africa (2020). 2021 Medium Term Expenditure Framework
Technical Guidelines. www.treasury.gov.za.
National Treasury Republic of South Africa (2020). Adjusted Estimates of National Expenditure
2020. www.treasury.gov.za.
National Treasury Republic of South Africa. (2020). Special Adjustment Budget Guidelines 2020.
www.treasury.gov.za.
Nel, J.M. (2006). An Analysis of the Legislative Mechanisms Available to Individual Debtors in terms of the South African Law. LLM-dissertation: University of South Africa.
Roestoff, M. & Coetzee, H. (2012). “Consumer Debt Relief in South Africa; Lesson from America and England and Suggestions for the Way Forward”. SA Merc LJ, 24, pp. 53-76.
Sharrock, R., Van Der Linde, K. & Smith, A. (2012). Hockly’s Insolvency Law. Cape Town: Juta & Co. Ltd.
Ssebagala, R.A. (2017). “Relieving Consumer Over-indebtedness in South Africa: Policy Reviews and Recommendations”. Journal of Financial Counselling and Planning, 28(2), pp. 235-246.
Theophilopoulos, C. Van Heerden, C. & Boraine, A. (2015). Fundamental Principles of Civil Procedure. Durban: LexisNexis.
Van Loggerenberg, D.E., Buckle, J. & Erasmus, H. (1997). Jones and Buckle: The Civil Procedure Practice of the Magistrates’ Courts in South Africa. 9th ed. Claremont: Juta & Co. Ltd.
World Bank, (2013). Insolvency and Creditor/Debtor Regimes Task Force Working Group on the Treatment of the Insolvency of Natural Persons Report on the Treatment of the Insolvency of Natural Persons.
Case Law
African Bank Ltd v Weiner 2005 (4) SA 363 (SCA) 366.
Bafana Finance Mabopane v Makwakwa 2006 (4) SA 581 (SCA) 583.
Cape Town Municipality v Dunne 1964 1 SA 741 (C).
Coetzee v Government of the Republic of South Africa; Matiso v Commanding Officer, Port Elizabeth Prison 1995 (4) SA 631 (CC).
Els v Els 1967 (3) SA 207 (T).
Ex parte August 2004 (3) SA 268 (W) 271.
Fortuin v Various Creditors 2004 (2) SA 570 (C) 573.
Hobson NO v Abib 1981 (1) SA 556 (N) 559-60.
Madari v Cassim 1950 (2) SA 35 (D) 38.
Mahomed v Lockhat Brothers & Co Ltd 1944 AD 230 241.
Weiner v Broekhuysen 2003 4 SA 301 (SCA) at 305E-F.
Legislation
Companies Act 71 of 2008.
Insolvency Act 24 of 1936.
Magistrates Courts Act 32 of 1944.
National Credit Act 34 of 2005.
National Credit Amendment Act 7 of 2019.
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Published
2021-11-22
How to Cite
Chitimira, H., Magau, P., & Mothibi, P. . (2021). Alternative Measures for the Discharge of Debts for Over-Indebted Persons under the Magistrates’ Courts Act 32 of 1944: Array. Acta Universitatis Danubius. Juridica, 18(3). Retrieved from https://dj.univ-danubius.ro/index.php/AUDJ/article/view/1341
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Copyright (c) 2021 Howard Chitimira, Phemelo Magau, Paballo Mothibi
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