A fresh start for individual debtors: the role of South African insolvency and consumer protection legislation

During the last two decades South Africa has witnessed not only a sharp increase in consumer debt but also a strong increase in the granting of credit to individuals. This paper briefly examines the philosophy underlying the contemporary South African insolvency law and also highlights some of the practical problems stemming from its creditor oriented philosophy. In May 2001 INSOL International published a report which is of the view that the solution to over‐indebtedness is to be found, inter alia, in the idea that prevention is better than cure. This paper therefore also investigates the extent to which existing measures of the South African consumer protection law are aimed at the prevention of problematic debt situations. In conclusion we suggest that the existing insolvency and consumer protection legislation is not equal to the task of combating over‐indebtedness and overspending by individuals and that law reform is therefore essential. Copyright © 2005 John Wiley & Sons, Ltd.