Law Update : Issue 1

Posted on: January 30th, 2014 by STBBSiteOwner

ON BREACH OF DEBT RESTRUCTURING ORDER, LENDERS’ RIGHTS TRUMP

With the coming into operation of the National Credit Act, many lenders felt that (too) much leniency is afforded to borrowers when they default on their repayments. The good and necessary aims of the Act aside, there are instances where borrowers appear to abuse the relief options afforded by the Act. There is, however, always a point of no return, where the money must be repaid or the asset is lost.

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Summary

DEFAULTING DEBTOR CAN TAKE THE STING OUT OF AN EXISTING DEFAULT JUDGMENT BY REINSTATING A CREDIT AGREEMENT

The NCA has a mechanism whereby a defaulting debtor can, in certain circumstances and by operation of law, reinstate a credit agreement by paying the full outstanding amount and whatever related enforcement costs which may exist at the time. The effect hereof is to render an existing default judgment useless in the hands of the judgment creditor, obliging him to obtain a new judgment should the creditor again default.

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Summary

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