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National Credit Act – Reinstatement of a Credit Agreement

Recently the Constitutional Court recognized that if a transaction between a Consumer (You) and a Credit Provider can follow its normal course rather than the Credit Provider having to follow debt recovery procedures through litigation, should you default on a payment, this is preferable to the financial and social costs that are consequences of a litigious process.

The court held that Consumers who fall into arrears with their payments in respect of a Credit Agreement, could reinstate this Agreement by bringing their account up to date, even after the Credit Provider has obtained judgement for the full amount that had been borrowed.

The concept of reinstatement or right to re-instate a Credit Agreement, is relatively new to South African law but effectively overturning the Credit Provider’s enforcement of their rights under a Credit Agreement’s acceleration clause.

Reinstatement of a Credit Agreement can take place when you have paid all overdue amounts to the Credit Provider, which may include any reasonable costs for enforcing the Agreement as well as any default charges due by you. In this instance you will not need to pay the full outstanding amount of the Agreement or notify the Credit Provider of reinstatement.

However, it is important to note that a Credit Agreement can only be reinstated if you make payment as set out above BEFORE the Credit Provider cancels the Agreement and at any stage up to execution of a judgement against you. Reinstatement cannot take place after the attached or surrendered property has been sold, a court order enforcing the Agreement has been executed, or when the Agreement has been terminated in terms of section 123 of the National Credit Act.

For any queries regarding the Reinstatement of Credit Agreement please contact Myers Attorneys on 011 346 2422 or

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