The new law, which has just been passed by parliament, could mean that almost 10 million people’s debts may be written off. The law, which is seen as a benefit of predominantly black people, who incurred debt while their income is such that they cannot pay the debt, was of particular concern to the bankers.
However, people must go through a lengthy application process to be released from the debt incurred, and it can take months before the applicant is released from debt.
The one condition is that the person’s income must be less than R7,500 per month.
Clothing stores and bankers are struggling to write off all the debts, and are likely to put in place new measures that allow low-income clients no or very little debt.
Economic advisers point out that the law means that millions of Rand’s goods were given away by shopkeepers and that banks gave away money without getting a cent back.
The crux of the matter is that it is mainly other people who are once again favored, it was said.
A real example is of someone earning R7,000 a month, and having a total debt burden at various institutions of R40,000, then the debtor can apply to have it written off, and the creditor is the loser, and can even forcing many institutions to close their doors.