NDMA Case Studies
CASE STUDY 1
Mrs K, a 36 year old divorced mother of two; residing at Johannesburg Northern suburbs; found herself
facing financial distress after the divorce. The divorce settlement entailed that she retain the bonded
property which she will be solely liable for monthly payments; sole custody of the two minor children
and repayment of all household debts that were incurred during the marriage.
During this period, her car suffered mechanical breakdown, this was after the warranty expired, she was
required to pay an amount of R65 000.00. Due to the nature of her work, she is required to travel
extensively and therefore had no other alternative but to repair the vehicle, which let her to default on
her other credit agreements, thus resulting her not being able to settle the arrears. She approached her
bank to grant her a further bond to settle her unsecured debts; however, the loan application was
declined.
She then approached individual credit providers to restructure her debts, but the secured credit
providers rejected her request and advised her to surrender the assets. In this instance she approached
the National Credit Regulator (NCR) who referred her to a Debt Counsellor.
The Debt Counsellor generated a proposal applying NDMA rules which solved on Rule 1 (term
extension); and this was fully accepted by all Credit Providers.
Below is a detailed summary of her debts.
Summary of Debts
Home Loan
R 860 000.00
Vehicle
R 129 000.00
Unsecured Debts
R 144 000.00
Total Debts
R 1 133 000.00
Instalment required
R 18 407.00
Amount available for repayment R 10 000.00
Directors: J. de Ridder (Acting Chairperson); C. Otto (MFA) ); H. Ferreira (MFSA); T. Msimang (NCRF); B. Tucker (BASA);
J. Magerman (Independent); L. Norval ( Independent ); B. de Beer (DCASA); M. Mphahlele (CEO, NDMA)
Tel: +27 (011) 326 3459 ● Fax: +27 (011) 781 0589 ● E-Mail: info@ndma.org.za ● Website: www.ndma.org.za
Registration Number: Section 21 2008/023383/08
1
CASE STUDY 2
Mrs N, a divorced mother who is currently 40 years old from Ebony Park, Midrand Township, had a joint
bond with her ex-husband (43 years old). During the divorce process, her ex-husband who was
responsible for bond repayments, stopped paying and therefore fell behind on monthly repayments
which let them being summoned in 2007.
Since she could not afford to settle the arrears and had no reason to defend the matter, judgment was
granted. Noticing that she was going to lose her property, she made an arrangement with the bank to
pay the monthly instalment of R3 700 plus more to reduce the arrears. While concentrating in securing a
shelter for her kids, she could not afford to pay other credit providers and they started threatening her
with the legal action.
After one credit provider issued her a section 129 notice, that is when she learned about debt
counselling and immediately contacted the debt counsellor in December 2008 to assist her in
restructuring all her debt obligations. By then, she had broken the arrangement with the bank while
trying to service all the debts.
The debt counsellor sent a notification to all credit providers that the consumer was in debt review in
terms of the National Credit Act (NCA) and also the restructuring proposal which the bank rejected citing
the fact that the home loan account was precluded from debt review as the legal action had already
commenced (section 86(2). Subsequently the property was declared executable. The consumer,
however, started paying an amount of R1 300 religiously every month towards the home loan from date
of debt review application.
The sale in execution was scheduled for the 5th November 2009 and in a desperate measure to cancel
the auction, the debt counsellor approached the National Credit Regulator (NCR) to intervene only to
find that they had no jurisdiction in terms of section 86(2) of NCA.
In the late afternoon of the 3rd November 2009, the debt counsellor contacted the National Debt
Mediation Association (NDMA) to intervene.
Mediation
NDMA immediately contacted the bank and their litigation attorneys to reconsider the proposal
applying the NDMA Rules as their risk appetite and cancel the sale even though the account was
precluded from debt review. On the 4th instant (the next day), the Head of Debt Review Department
confirmed to NDMA in writing that the legal action had been cancelled and the account had been
included in debt review. NDMA duly informed both the debt counsellor and the consumer.
Directors: J. de Ridder (Acting Chairperson); C. Otto (MFA) ); H. Ferreira (MFSA); T. Msimang (NCRF); B. Tucker (BASA);
J. Magerman (Independent); L. Norval ( Independent ); B. de Beer (DCASA); M. Mphahlele (CEO, NDMA)
Tel: +27 (011) 326 3459 ● Fax: +27 (011) 781 0589 ● E-Mail: info@ndma.org.za ● Website: www.ndma.org.za
Registration Number: Section 21 2008/023383/08
2
CASE STUDY 3
Mr G, a 64 year old prominent businessman lived with his senior citizen mother aged 86 years in the
leafy Sandton Suburb since 1989. He bought a primary residential property and registered a mortgage
bond in the name of business (juristic person) for R414 000 in 1989 payable over 20 years.
His financial woes started in 2007 when he got divorced to his wife whom was awarded the cash in the
joint estate and (he) was left with the shares only as the source of income. He later signed a lucrative
contract with overseas investor (Chinese Bank) who pulled out and cancelled the contract in January
2010 because of the global recession. He had to rely on annual dividends to service the bond and during
the divorce period, he defaulted in payments which let the bank to foreclose against the business
(principal debtor) and himself (guarantor).
By that time, the full outstanding amount of +- R217 000 on the bond was called up. The sale in
execution date was scheduled for the 26th January 2010. He approached a debt counsellor to negotiate
with the bank to grant him time until March 2010 to pay off the full debt after receiving his R400 000
dividends. The bank could not wait longer and proceeded with the sale to mitigate their risk.
The consumer had no personal debts besides this bond and therefore the debt counsellor could not
assist further except to refer the consumer to the National Credit Regulator (NCR) and National Debt
Mediation Association (NDMA).
Mediation
The consumer approached NDMA on the eve of the sale date and established the following:






Property was registered in 1989 for R414 000
Outstanding amount in January 2010 was R217 000 all inclusive
The bank had valued the property for more than R2m
There was a proof that the consumer was going to earn R400 000 dividends in March 2010
The sale in execution was set for the next day, 26th January 2010
There was enough equity in the property to stay the sale until March 2010 whereafter the full
balance will settled
The NDMA mediated between the consumer and the bank who reached an amicable solution. The bank
cancelled the sale and awaited the full payment in March 2010.
Directors: J. de Ridder (Acting Chairperson); C. Otto (MFA) ); H. Ferreira (MFSA); T. Msimang (NCRF); B. Tucker (BASA);
J. Magerman (Independent); L. Norval ( Independent ); B. de Beer (DCASA); M. Mphahlele (CEO, NDMA)
Tel: +27 (011) 326 3459 ● Fax: +27 (011) 781 0589 ● E-Mail: info@ndma.org.za ● Website: www.ndma.org.za
Registration Number: Section 21 2008/023383/08
3
Conclusion
NDMA advised the consumer to attend the auction to make sure that his property has been withdrawn
from the Sheriff’s auction list. He informed us on the next day that he spoke to the Sheriff on site and
confirmed that there was no instruction received to cancel the sale. NDMA followed up with the bank
who immediately complied via their attorneys and the Sheriff confirmed that the sale was then
cancelled properly. It is very important for the consumers to attend the auctions on the sale date of
their properties to make sure that Sheriff has received the proper instruction.
Directors: J. de Ridder (Acting Chairperson); C. Otto (MFA) ); H. Ferreira (MFSA); T. Msimang (NCRF); B. Tucker (BASA);
J. Magerman (Independent); L. Norval ( Independent ); B. de Beer (DCASA); M. Mphahlele (CEO, NDMA)
Tel: +27 (011) 326 3459 ● Fax: +27 (011) 781 0589 ● E-Mail: info@ndma.org.za ● Website: www.ndma.org.za
Registration Number: Section 21 2008/023383/08
4
Background
Mr V, a 37 year old from Naboomspruit got divorced to his 29 year old wife. They both had one account
each with the same furniture shop.
Mr V’s income and expenses summary
Income
Rent
Groceries
Total
Distributable amount
R3 000
R1 200
R1 000
R2 200
R 800
He owed R12 000 to the furniture shop with the monthly instalment of R760. His ex-wife left the
furniture bought on her account with him to keep and pay for it. Her balance was R5 000 and the
monthly instalment was R483. He could not afford to settle the arrears for both accounts and received
threatening calls from the credit provider. He then called the National Credit Regulator (NCR) for an
advice and was referred to a debt counsellor who put him under debt review.
He was paying R800 to the PDA every month and only R80 was distributed to his account and was told
that the rest went towards the fees. When the credit provider continued to call him for reasonable
payments, he contacted NCR who referred him to NDMA.
Mediation
NDMA contacted the respective furniture shop to consider voluntary restructuring. They requested his
income and expenses and an affidavit from his ex-wife that she left the furniture with him, to pay for it
and would not claim it afterwards. They agreed to restructure voluntarily.
Directors: J. de Ridder (Acting Chairperson); C. Otto (MFA) ); H. Ferreira (MFSA); T. Msimang (NCRF); B. Tucker (BASA);
J. Magerman (Independent); L. Norval ( Independent ); B. de Beer (DCASA); M. Mphahlele (CEO, NDMA)
Tel: +27 (011) 326 3459 ● Fax: +27 (011) 781 0589 ● E-Mail: info@ndma.org.za ● Website: www.ndma.org.za
Registration Number: Section 21 2008/023383/08
5
Background
Mr T, a 40 year old technician married in community of property to a 34 year old housewife had a
vehicle and asset finance account with the bank. His job required him to travel extensively even to the
rural areas. He then bought a Nissan 4X4 with residual in order to pay fewer installments.
His financial problems started when he was transferred from Mafikeng, North West to Pretoria. He had
to pay for household expenses in Mafikeng and Pretoria. He also had a sick child who was in and out of
hospital and the medical aid funds got exhausted. He started borrowing money from different credit
providers to supplement his income. Eventually, he could not monthly obligations and approached a
debt counsellor in 2008.
The debt review process was completed and the court order to restructure his credit agreements was
obtained in 2009. He was requested to pay the distributable amount to the Payment Distribution
Agency (PDA) every month of which he did.
The bank received sporadic payments from the PDA and eventually terminated the debt review
application and proceeded with enforcement action. After obtaining the court order to repossess the
asset, the consumer received a call to release the vehicle and immediately contacted the debt
counsellor who found that the PDA skipped a period of about six months without payment despite
having received the funds from the consumer.
In desperation to stop the car from being repossessed, fearing the expulsion by the employer, the
consumer called the credit ombudsman who referred him to NDMA.
Mediation
NDMA mediated between the consumer and the bank and pointed out that the consumer performed his
duty to pay but was failed by the process, therefore it was not his fault. The bank cancelled the legal
action on condition that the consumer pays directly to his loan account to prevent the same thing
happening again. The consumer agreed and volunteered to pay more as his wife has now found a
permanent job. He would therefore approach the debt counsellor to do the necessary amendments.
Directors: J. de Ridder (Acting Chairperson); C. Otto (MFA) ); H. Ferreira (MFSA); T. Msimang (NCRF); B. Tucker (BASA);
J. Magerman (Independent); L. Norval ( Independent ); B. de Beer (DCASA); M. Mphahlele (CEO, NDMA)
Tel: +27 (011) 326 3459 ● Fax: +27 (011) 781 0589 ● E-Mail: info@ndma.org.za ● Website: www.ndma.org.za
Registration Number: Section 21 2008/023383/08
6
Background
Mr N, a 53 year old man from Pretoria took a personal loan for R23 000 with a bank in 2005. He
defaulted on payments and judgment was granted against him. In November a Warrant of Execution
against his movables valued at R40 000 by the Sheriff was granted.
The consumer then applied for debt counselling and the debt counsellor tried to negotiate a reasonable
arrangement for the personal which was rejected citing the fact that the agreement was excluded from
debt review in terms of Sec 86(2) of NCA (legal action commenced prior to debt review application).
On the 22rd December 2009, Sheriff attached the movables and stored them in Pretoria warehouse. The
debt counsellor contacted NDMA to mediate.
Mediation
NDMA brought the matter before the bank to consider the NDMA proposal and release the assets to the
consumer before the Sheriff and attorneys closed. The bank considered the proposal and ordered the
consumer to collect his assets the next day (23rd December 2009) before 13h00 as thereafter, the
warehouse, Sheriff and attorneys would be closed for festive season. The consumer collected his assets
and the account was placed under debt review.
Directors: J. de Ridder (Acting Chairperson); C. Otto (MFA) ); H. Ferreira (MFSA); T. Msimang (NCRF); B. Tucker (BASA);
J. Magerman (Independent); L. Norval ( Independent ); B. de Beer (DCASA); M. Mphahlele (CEO, NDMA)
Tel: +27 (011) 326 3459 ● Fax: +27 (011) 781 0589 ● E-Mail: info@ndma.org.za ● Website: www.ndma.org.za
Registration Number: Section 21 2008/023383/08
7