A critical analysis of debtor’s right to reinstate a credit agreement & resume possession of property

Abstract

In terms of section 129(3)(a) of the South African National Credit Act 34 of 2005 a consumer may reinstate a credit agreement that is in default by paying all the money that is overdue together with default charges incurred by the credit provider and also the costs of enforcing the agreement until the agreement is reinstated. A consumer should pay costs of reinstating agreement if the credit provider has not yet cancelled the agreement. A consumer who paid the required costs will also resume possession of goods that were repossessed by the credit provider pursuant to attachment order. However a consumer is prohibited from reinstating a credit agreement after the property is sold pursuant to attachment order or surrender of property in terms of section 127 (section 129(4)). A consumer is also prohibited from reinstating a credit agreement after the execution of court order enforcing that agreement or after termination of agreement in terms of the NCA (section 129(4). Therefore a question arise as to whether a consumer who fell in arrears can reinstate a credit agreement by paying the arrears and preclude a credit provider from proceeding to sell the property. In other words whether a consumer who paid arrears on credit agreement can reinstate such credit agreement and disentitling the credit provider from selling the property. This was the crisp question put to the court in the recent decision in Nkata v Firstrand Bank Limited and Others (CCT73/15) [2016] ZACC 12; 2016 (6) BCLR 794 (CC); 2016 (4) SA 257 (CC) (21 April 2016). The purpose this article is to critically analyse the decision in Nkata v Firstrand Bank Limited and Others (CCT73/15) [2016] ZACC 12; 2016 (6) BCLR 794 (CC); 2016 (4) SA 257 (CC) (21 April 2016) in view of the application and interpretation of section 129(3) and (4) of the NCA.