New rule could help home loan defaulters

Proposed changes in court rules that will make it impossible for creditors to sell the homes of defaulters for a pittance, still leaving them deep in debt and homeless, would greatly alleviate the suffering of deeply indebted South African consumers.

This is according to Neil Roets, chief executive of Debt Rescue, who said it had become common practice for especially banks to sell off property of credit defaulters at auction, often for ‘ridiculous’ prices.

‘The likely change in these rules could see a reserve price being set for the sale in execution of defaulting debtors’ homes. This will avoid the consumers being left without a home and with little relief for their outstanding debt,’ Roets said.

The idea behind exploring the amendment of Uniform Rule 46 for the high courts and Rule 43 of the Magistrate’s Courts Rules is to protect debtors in instances where their homes are sold for an extremely low amount and they still find themselves owing money to their creditors.

The Rules Board for Courts of Law has invited comments on the proposed amendment. The deadline for submissions is February 28.

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