Debt dictionary – The ABCs of debt

30 Jun 2022

Got a question about debt? The answer may be here.

Administration order

This is a court order where your financial position is examined and an administrator divides your salary amongst the creditors. The order will remain on your credit record for a period of five to ten years, or as soon as the order is cancelled.


A plan on how to spend your money. It allows you to track your income and spending habits.


This means that all personal details are kept safe and are not shared with others.

Consent to judgment

Section 58 of the Magistrates Court Act allows a debtor (consumer/person who has debt or owes money) to sign a consent to judgment when a letter of demand or summons is served. This means a creditor (the person or company who is owed money) can obtain a judgment against the debtor without having to prove the claim. DO NOT SIGN BEFORE SEEKING HELP FROM A DEBT COUNSELLOR OR ATTORNEY!


Instead of paying different creditors, you combine all your debts into one loan account and make a single payment once a month.


A consumer is the person who buys goods or services or the person who is loaned money. In a credit agreement, the consumer is referred to as “the debtor”.

Consumer rights

The National Credit Act (NCA) grants and protects the following rights to the consumer:

  • Right to apply for credit;
  • Protection against discrimination in respect of credit;
  • Right to receive reasons for credit being refused;
  • Right to receive documentation relating to a credit agreement;
  • That the above documentation be in plain and understandable language and in certain languages;
  • To challenge records on the credit bureau and be compensated if the information is incorrect; and
  • The right to confidentiality.
Credit amnesty

Credit Information Amnesty is a government initiative which states that credit bureaus are obligated to remove information from your credit report as follows:

  • Once-off removal of negative information, including defaults, that were reflected before 1 April 2014; and
  • Once-off removal of paid-up judgements that were reflected before 1 April 2014.
Credit agreement

This is an agreement that allows you to pay back money you owe at a later stage. A credit agreement also contains a fee or interest charged for this deferred payment. Credit agreements include:

  • Credit cards
  • Mortgage loans
  • Instalment agreements
  • Overdraft facilities and cheque accounts
Credit bureau

This is an organisation registered with and regulated by the National Credit Regulator (NCR), that keeps records of your credit information. It shows how you manage your debts and is used by credit providers and money lenders to decide if you can afford to borrow money.

Credit guarantee

A third party agrees to pay to a creditor the amount due by a consumer, on demand.

Credit life insurance

This is money payable to a consumer in the event of death, disability, terminal illness, unemployment or other risks that will prevent the consumer from earning a living.

Credit Ombud

The office of the Credit Ombud resolves issues and complaints from consumers and businesses that are negatively impacted by credit bureau information or when a consumer has a problem with a credit provider.

Credit provider/creditor

The party who supplies goods, services or money to the consumer. The credit provider is often referred to as “the creditor”.


Money that has to be paid back as specified in an agreement. The person who owes money is a debtor and the person who is owed money is a creditor, or lender.

Good debt: Money borrowed to create an investment, that in turn increases value. Examples include student loans, home loans or business loans.

Bad debt: Money borrowed to purchase disposable items that decrease in value very quickly. Examples include store cards and personal loans.

Debt counselling (debt review)

A legal process where you apply to have your debt restructured by a professional in order to make your repayments affordable. Debt counselling helps you pay your monthly necessities while paying off your debt.

Debt counsellor

A professional who must be registered with the NCR and who takes care of the debt restructuring process. Once you undergo debt counselling, you will no longer receive calls from creditors. It also means that creditors have to stick to the new repayment arrangement and may not take legal action against you, as long as you pay according to the new arrangement.


The person who owes money to a creditor or lender.


A failure to make payment as per your agreement. Such a default may reflect (for up to two years) on your credit report, held by credit bureaus.

Emolument attachment order

A court order delivered to a debtor’s employer which allows the employer to deduct monthly payments from the employee’s salary. In this way, the employee is forced to pay back an outstanding debt and a monthly payment is made by the employee to a creditor.

Garnishee order

A court order similar to an emolument attachment order which allows an employer to deduct monthly payments from the employee’s salary. However, a garnishee order includes large amounts from a debtor. This is usually a once off deduction.


A fee paid by a consumer for the use of money borrowed. Interest is paid regularly at a particular rate for the use of the money lent or for delaying the repayment of a debt.

Prime lending rate

This is the amount of interest you are charged.


A court order is requested by a credit provider when a debtor has not paid a debt. A legal process is then followed before a judgment is issued and a summons is sent to the individual. The summons lets the person know about his/her court appearance. Where an individual fails to appear, the judgment is issued in default. The judgment is held on the system of credit bureaus for up to five years and is then automatically removed.

Letter of demand

A letter that informs the consumer he/she is in debt and owes money. The credit provider may not proceed with any legal action unless a period of 10 days has elapsed since the delivery of the notice.

Prescription Act 68 of 1969

If the last time you paid any money on an account was more than three years ago, and you have not admitted that you owe the money, you can claim that the debt has prescribed. This means that the creditor has the right to ask for the money, but you can refuse to pay the remaining balance on the debt. Prescription does not apply if judgment has been taken for the debt. If a claim has prescribed, the negative listing must be removed from the credit bureau’s records in terms of the NCA.

In terms of section 11, the prescription period is:

  • 30 years for debts secured by mortgage bond or judgment debts;
  • 15 years for certain debts owed to the State;
  • 6 years for debts arising from a bill of exchange or notarial contract;
  • 3 years in other cases “save where an Act of Parliament provides otherwise”.
Mortgage agreement

An agreement in which you are given credit to buy a property.

National credit regulator (NCR)

The body responsible for the regulation of the credit industry.

Ombudsman for banking services (OBS)

This body/person resolves complaints about banking services and products. Any bank customer who has a complaint against a bank may approach the OBS for assistance.


A consumer is over-indebted if he/she is unable to pay the amounts due in the time stated in the agreement.

Secured loan

A promise, made to the credit provider, which says that should a consumer not be able to repay a loan, his/her property or something else of value will be taken by the creditor instead.

Service fee

A fee that may be charged by a credit provider for routine administration and services such as statements and withdrawals.


This process entails selling an individual’s assets to pay off or lessen his/her current debt. The court will appoint someone to manage his/her money. This process may take five years or more.

Statements of account

Credit providers must deliver statements of accounts, usually once a month, to consumers. Credit providers are also obliged to provide consumers with statements of accounts on request, at no charge. A consumer may choose how the statement must be delivered.

Surrender of goods

A consumer may, at any time, return goods that are subject to a credit agreement to a credit provider, whether or not the consumer is in default. The credit provider must then sell the goods and use the proceeds to settle the account.

See also:

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
Get In Touch!

Banking & Finance Law articles by

Banking & Finance Law articles on GoLegal