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11 Int'l Insolvency Rev. 1 (2002)

handle is hein.journals/intvcy11 and id is 1 raw text is: 








     Fresh Start Procedures for Consumer

 Debtors in South African Bankruptcy Law


               Andr Boraine* and Melanie Roestoff**

                                 Universiy of Pretoria


                               I. Introduction

The purpose of this paper is to give an overview of procedures and certain practical
problems relating to debt relief measures in South African law.
   The Insolvency Act 24 of 19361 is the main source regarding consumer bank-
ruptcy in South Africa but there are some alternative debt relief measures provided
for outside the ambit of this Act as well. It is however suggested that the current pro-
cedures are insufficient and the system needs to be reformed.2
   Another current issue relating to South African law is the fact that we largely
have to deal with a sophisticated first world economy as well as a third world econ-
omy that reflects in consumer patterns and needs. Probably due to the heritage of
apartheid, some can obtain credit from the main stream financial institutions whilst
the majority have to go to either informal money lenders or the so-called micro
lenders that grant relatively small loans but at high interest rates. This is a result of
the risk involved due to a lack of adequate security that can be granted by this
category of debtors. In the current political dispensation many people from the
previous disadvantaged communities are however becoming part of the credit
industry in some way or another and it is interesting to see if our system provides
adequate debt relief measures to deal with current demands. Although this is an
important feature of modern South Africa, it is not the purpose of this paper to
deal with this aspect at any length.
   This paper will therefore focus on debt relief measures provided for by the Insol-
vencyAct as well as such alternatives measures outside the ambit of the Insolvency
Act. Reform proposals will also be referred to.3
*Professor of law, University of Pretoria.  comprehensive commentary on the reform of in-
**Senior lecturer, University of Pretoria.  solvency law in South Africa. These reform propo-
1. Hereinafter the 'Insolvency Act.'     sals contain some new features regarding debt relief
2. See A. Boraine and M. Roestoff 'Vriendskaplike  measures for consumer debtors in South African
Sekwestrasies 'n Produk van Verouderde Begin-  law. See in general South African Law Commission
sels' (Deel 1) 1993 DeJure 230 236; A. Boraine and  Report 'Review of the Law of Insolvency' Project
M. Roestoff 'Developments in American Consumer  63, February 2000, hereinafter Draft Insolvency Bill of
Bankruptcy Law: Lessons for South Africa' 2000  2000 and the 'Commentary'. An earlier Draftlnsol-
Obiter (Part 1) in (vol 1) 33 and (Part 2) in (vol 2) 241.  vencyBill was published during 1996.
3. The South African Law Commission has pub-
lished the Draft InsolvencyBill of 2000 together with a
                                                        Int. Insolv. Rev., Vol. 11: 111 (2002)
Copyright ( 2002 JohnWiley & Sons, Ltd.                           DOI: 10.1002/iir.095

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