Zingapi Mabe
LLB LLM PhD
Senior Lecturer, Mercantile Law Department, University of Pretoria
Andre Boraine
Professor in law, Mercantile Law Department, University of Pretoria
Volume 58 2025 pp 360 - 384
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SUMMARY
During the sequestration process, an insolvent debtor is not only exposed to employment disqualifications but also to credit limitations, restricting the debtor from obtaining credit and participating in the economy. While these credit limitations may be justifiable during the sequestration process for public policy reasons, credit limitations that extend after the insolvent has been rehabilitated appear discriminatory against honest debtors. This is because the incentives for rehabilitation may include a debtor obtaining a fresh start through discharge from all pre-sequestration debts, the removal of insolvency disabilities, which include the restoration of full contractual capacity and, most importantly, the opportunity to start afresh, free to become an economically active member of society again. The question that will be addressed in this article is whether, in light of the international notion of a fresh start through discharge and the South African insolvency and credit laws, a rehabilitated debtor is indeed given a new opportunity to resume economic activity. More importantly, what does rehabilitation aim to achieve, and what ‘harm’ needs to be avoided to circumvent the discrimination of honest debtors once a debtor is rehabilitated? This article will address some of these questions by discussing the guidelines for an effective insolvency system according to the World Bank Report. Some comparative notes on anti-discriminatory credit laws in jurisdictions such as the United States of America and the United Kingdom will also be discussed. The antiquated rules of rehabilitation in South African insolvency law and credit limitations imposed on unrehabilitated and rehabilitated insolvent debtors in South Africa will be noted, and, lastly, the rationale for such limitations and the right to equality of rehabilitated debtors in South Africa will be analysed.
1 Introduction
One of the most important purposes of a modern insolvency system for natural persons is to re-establish the debtor’s economic capability, thus, economic rehabilitation.1 This entails, amongst others,2 treating debtors on an equal basis with non-debtors after receiving relief, thus the principle of non-discrimination. 3
South African insolvency law does not have anti-discriminatory credit laws as it concerns unrehabilitated and rehabilitated insolvents. As such, South African insolvency law limits the contractual capacity of an insolvent person, with the result that an insolvent person is prohibited from obtaining credit above a certain amount of money without first informing the credit provider of their insolvency.4 Also, information about a debtor’s insolvency status appears on the debtor’s credit record held by a credit bureau for five years during sequestration and another five years after rehabilitation.5 Credit providers use the information held by a credit bureau to determine whether to grant credit to a debtor.6 Because of the public availability of information about the rehabilitation order, a rehabilitated insolvent can be compared to a rehabilitated prisoner who has been released from prison, but who always has to declare that they were once convicted of a crime. Such a declaration or public availability of information makes it difficult for a rehabilitated ‘criminal’ to obtain employment and, by analogy, for a rehabilitated insolvent to access credit.7
Therefore, these restrictions make it difficult for an insolvent person to recover from insolvency and to re-establish themselves in the economy, for example, by obtaining credit to start a business or by finding employment.8 This is because the incentive of being rehabilitated is that, in general, a debtor is discharged from all pre-sequestration debts and all the disabilities imposed on the debtor during sequestration come to an end and the debtor’s full contractual capacity resumes.9 In the United State of America, this is referred to as a ‘fresh start’ in that a debtor is given a new opportunity to start afresh, free to become an economically active member of society again.10
However, although the fresh-start policy aims to give the honest but unfortunate debtor a fresh start through the discharge of debts, it does not provide debtors with a completely clean slate, as there are several limiting factors.11 These include the availability of a discharged bankrupt’s credit history report,12 employment discrimination after discharge, and laws that increase the stigma attached to bankruptcy.
In South Africa, even though insolvent debtors regain full contractual capacity after rehabilitation, allowing them to enter into any contract without first informing the credit provider that they were once insolvent, their ability to get credit remains limited by the display of their rehabilitated status in their credit bureau report for five years after rehabilitation. This is in contrast to other debtors who, like insolvent debtors, had unpaid judgments but whose depiction thereof is not only removed automatically once the debtor has paid up the judgment but is also not replaced with a ‘paid-up judgments’ entry. Further, the display in the credit bureau report that a debtor is under debt restructuring13 is depicted, only until a clearance certificate is issued and for a debtor under administration,14 only until the administration order is rescinded by a court.15 Unlike in the case of rehabilitation of an insolvent debtor for both debt restructuring and administration, such depiction is not replaced with something else that might hinder a debtor from obtaining credit after the end of the process. Thus, rehabilitated debtors in South Africa are not treated the same as not only non-debtors but also as other debtors after receiving relief.
While the public display of a debtor’s insolvency status during the sequestration process may be justifiable based on public policy,16 thereby protecting the granting of credit to debtors who cannot afford it,17 it appears discriminatory when it applies to debtors after rehabilitation, especially when it applies to honest debtors. It appears even more discriminatory when compared to debtors in similar situations, whose depiction in the credit bureau report is removed automatically after paying the debt, whereas for rehabilitated insolvents, a ‘rehabilitated insolvent’ entry is kept for five years after rehabilitation. 18
The question that will be addressed in this article is whether, in light of South African insolvency and credit laws, a rehabilitated debtor does indeed start afresh. Are they indeed given a new opportunity to resume economic activity as before sequestration, or is it an ideal more than a reality? Does the notion of a fresh start through rehabilitation and discharge of pre-sequestration debts allow the rehabilitated debtor to immediately and automatically, by operation of law, be permitted to obtain credit after rehabilitation? More importantly, what does rehabilitation aim to achieve, and what ‘harm’ needs to be avoided to circumvent the discrimination of honest debtors when a debtor uses rehabilitation?
This article will address some of these questions by discussing the characteristics of an effective insolvency system for natural persons according to the World Bank Report. This will be followed by some comparative notes on anti-discriminatory credit laws in jurisdictions such as the United States of America (America) and the United Kingdom (England). Next, there will be a discussion of the antiquated rules of rehabilitation (long periods etc.) in South African insolvency law and the credit limitations imposed on unrehabilitated and rehabilitated insolvent debtors. Lastly, the rationale for such limitations and the right to equality in South Africa will be discussed, followed by the conclusion.
2 Guidelines for an effective insolvency system according to the World Bank Report
A study of international policy considerations on insolvency systems for natural persons is important in offering guidelines for South African insolvency law reform as it concerns restrictions on insolvent debtors. In this regard, the World Bank Report is discussed.
According to the World Bank Report, an insolvency system for natural persons has many goals, but as indicated, one of its key aims is to re-establish the debtor’s economic capability - i.e., the economic rehabilitation of the debtor.19 Essential to achieving this goal is freeing the debtor from excessive debt,20 placing debtors on an equal basis with non-debtors after receiving relief, and enabling them to avoid becoming overindebted again.21 Another important goal of an insolvency system is to provide relief to the honest but unfortunate debtor.22 This paper focuses on the goal of placing debtors on an equal footing with other debtors after rehabilitation and providing relief to honest but unfortunate debtors.
Since discrimination can occur during and after the completion of a payment plan.23 It is important to consider the principle of non-discrimination to receive the full benefit of discharge and to achieve the economic rehabilitation of the debtor.24 The World Bank Report observed that while some countries have data protection regulations prohibiting the registration and use of information on completed payment plans, most countries appear not to have specific prohibitions against discrimination addressing the insolvency of natural persons.25 In the latter countries, an insolvency filing leads to discrimination against former natural-person debtors because the filing appears as a negative credit entry for several years after the conclusion of the insolvency case.26 Therefore, lawmakers are urged to bear these factors in mind when considering policies for natural-person debtors.
The World Bank Report also identified the important goal of providing relief to the honest but unfortunate debtor in an insolvency system.27 Almost all insolvency systems have debtors who abuse the system.28 As a result, the ‘good-faith’ principle features in virtually all insolvency systems, and fraudulent debtors who abuse the insolvency system are identified and denied a fresh start and discharge.29 The aim is to ensure that the honest but unfortunate debtor receives the full benefits of an insolvency system and is not counted and disadvantaged with the dishonest debtors.30
The World Bank Report also observed that an insolvency system for natural persons affects fundamental legal rights such as the right not to be discriminated against, the right to work, and basic social rights.31 The World Bank Report calls on researchers and lawmakers to consider these factors when developing policies for natural-person debtors.32 Further, lawmakers should consider choosing insolvency structures that allow for similar treatment of individual debtors similarly situated and prevent fraud and the abuse of the insolvency process.33 The section below discusses some comparative notes on discharge and anti-discriminatory credit laws in countries like the United States of America and England
3 Some comparative notes on discharge and anti-discriminatory credit laws in the United States of America and England and Wales
3 1 Discharge and credit limitations in America
The interest in the American system is compelled by the system’s pro-debtor approach to bankruptcy and its focus on providing a discharge and a fresh start to the ‘honest but unfortunate’ debtors.34 For consumers, the most important feature of bankruptcy is the discharge of debts and the possibility of a second chance for financial success.35
In America, automatic discharge of debts occurs almost immediately, which can be after a period of three months.36 Upon receiving a discharge, all judgments based on the debtor’s personal liability for discharged debts are void37 and unenforceable, and the creditors are prevented from attempting to collect discharged debts.38 Thus, a debtor receives a fresh start because the discharge prohibits the creditors from taking further action to collect discharged pre-petition debts39 and discharge becomes a valid legal defence against such collection actions.40
A discharge in Chapter 7 cases is available to all individuals, but not all individuals receive the discharge.41 It is only given to honest debtors. Thus, a discharge is denied to debtors who, amongst other things, with intent to hinder, delay, or defraud a creditor or the trustees, transfer, remove, destroy, mutilate, or conceal their property within one year before the date of their bankruptcy petition or after it has been filed.42 These debtors are not regarded as honest and do not deserve the fresh start that bankruptcy provides.43
Misconduct in the bankruptcy proceedings is punished by a denial of discharge. Similar to the American bankruptcy system, in South African insolvency law, the conduct of the insolvent before or during the sequestration process influences whether a rehabilitation order and subsequently a discharge can be granted by the court.44 A South African court can exercise its discretion against granting a rehabilitation order if the insolvent’s conduct before and during sequestration shows that he or she is dishonest, fraudulent, or reckless.45 This is in line with the Bankruptcy Code and international trends that favour the consideration of the debtor’s circumstances to distinguish the honest from the fraudulent and dishonest debtor so that only the fraudulent debtor is excluded from discharge.46
If a debtor’s discharge has been denied or some of his or her debts are non-dischargeable,47 once bankruptcy ends, he or she is exposed to creditors’ collection actions for pre-petition debts, but reduced by the amount he or she paid during bankruptcy. This is because the automatic stay, which protects him or her during the bankruptcy process, expires when the bankruptcy ends.48 The debtor’s assets in a Chapter 7 case will still be sold and distributed among his or her creditors, and thus the debtor still loses his or her non-exempt assets despite not receiving a fresh start.49 Therefore, in a Chapter 7 case where the debtor intended to exchange his or her non-exempt assets for a fresh start through a discharge, if the discharge is denied, the debtor loses everything - both his or her non-exempt assets and the fresh start.50 In South Africa, if an application for early rehabilitation has been denied, the court may indicate a period that must pass before the insolvent may renew the application, which may be after three months or three years, in which event the application may be granted automatically.51 Alternatively, the court may not indicate a renewal period, in which case the insolvent may renew the application after a reasonable period on proof of good conduct.52 In Engelbrecht NO v Naidoo,53 being the first known judgment to prevent automatic rehabilitation by effluxion of time of the prescribed ten year period, Du Plessis AJ provided Naidoo with the option to, at any time after the ten year period, apply for his rehabilitation in terms of the Insolvency Act.
Similar to South Africa’s Department of Trade and Industry’s amnesty regulations,54 in the United States of America, section 605 of the Fair Credit Reporting Act regulates the information that must be excluded from consumer credit reports. According to section 605(a)(1) of the FCRA, a consumer’s credit report may not include information about a debtor’s bankruptcy that is older than ten years from the date of entry of the order for relief or the date of adjudication, unless specifically authorised by subsection (b) of section 605. This has the effect of retaining a debtor’s bankruptcy filing in his or her credit record for ten years from the date of entry or adjudication, and only upon the expiry of ten years is the retention of a bankruptcy filing in a bankrupt’s credit record prohibited.55
Consequently, during the ten years, lenders may deny credit to bankrupt debtors or charge them higher fees and interest based on the bankruptcy.56 However, even though during the ten years, the promise of a fresh start and economic participation for honest but unfortunate debtors is derailed,57 it must be mentioned that in America, honest but unfortunate debtors are discharged almost immediately after the bankruptcy filing, which may be after three months. Further, discharged bankrupts in America do not experience as many restrictions as the South African rehabilitated insolvent. This is unlike the South African situation, where a debtor can be insolvent for ten years, during which they are subjected to various disqualifications, including credit limitations.
Further, in America, section 525 of the Bankruptcy Code was introduced to give effect to the fresh-start policy by prohibiting employment discrimination based on a credit history report reflecting bankruptcy during the ten years indicated in section 605(1)(a) of the FCRA. Section 525(a) protects a person who is or has been a debtor or a bankrupt, or a person who has been associated with a debtor, from being denied employment, from the termination of his or her employment or discriminating against that person with regard to employment based on a credit history report depicting bankruptcy, by government units. Essentially, section 525(a) prohibits government units from discriminating against debtors with regard to licences, permits, charters, franchises, or employment based on the debtor’s status as a discharged bankrupt.58 Thus, the prohibition against discrimination in section 525(a) is in respect of both current and prospective applicants but applies to government units only.
Section 525(b) of the Bankruptcy Code, which prohibits the same actions, on the other hand, only applies to discrimination in respect of current employees by private employers. Therefore, if a debtor is a current employee, a private employer may not terminate his or her employment based on him or her having obtained a bankruptcy discharge or having unpaid discharged debts depicted on his or her credit history report.59 However, if the debtor is a job applicant, a private employer may refuse to employ him or her based on his or her bankruptcy status as the prohibition does not apply.
To overcome the problem of discrimination by private employers, several American states have enacted anti-credit legislation that either bans or limits employers’ access to a job applicant’s consumer credit report or bankruptcy information which is damaging to a job candidate’s application and does not provide any legitimate insight into the candidate’s qualifications.60
At the federal level, the proposed Equal Employment for All Act61 was reintroduced by Congressman Steve Cohen in the 116th Congress in 201962 and again in 2023 by Senator Elizabeth Warren.63 The Bill aims to amend the FCRA to prohibit the use of consumer credit checks against prospective and current employees in making adverse employment decisions.64 The EEA Act limits when an employer can use credit reports as an employment pre-screening tool only to where the job entails a ‘supervisory, managerial, professional or executive position at a financial institution’ or if the job requires national security or Federal Deposit Insurance Corporation clearance.65 If this Bill is passed into law, it will prevent employment discrimination based on a credit history report reflecting a bankruptcy filing.66
While sections 525(a) and (b) of the Bankruptcy Code concern employment discrimination, section 525(c) prohibits government units from denying a student loan to a previously bankrupt debtor. This applies to granting student loans, loan guarantees, or loan insurance.67 Section 525(c) prevents former bankrupts from being restricted from accessing further education, which may unduly increase the possibility of future financial difficulties.68
The Bankruptcy Code in section 303(k)(2) goes further and protects a debtor whose involuntary filing was dismissed. In this regard, a court may grant an order prohibiting credit agencies from reflecting the dismissal in the debtor’s credit report, thereby protecting the debtor from any possible disadvantage.
Section 364 of the Bankruptcy Code regulates a debtor’s ability to obtain credit in re-organisation cases between the commencement of the case and the confirmation of the plan.69 This would be the case where a debtor who is self-employed and thus engaged in business, and who incurs trade credit in the production of income from such employment is allowed to enter into transactions, including the sale or lease of property of the estate, in the ordinary course of business, without notice or a hearing, and may use the property of the estate in the ordinary course of business without notice or a hearing.70 However, if a debtor wishes to enter into a transaction including the sale or lease of property of the estate that is outside the ordinary course of business, a notice and a court hearing are required before entering into such a transaction.71 This regulation of a debtor’s credit is possible in reorganisation cases in America because debtors normally keep their property and make payments to creditors from future income in terms of a court-approved plan, whereas in Chapter 7 cases, the debtor gives up all their property in exchange for discharge. The regulation of a debtor’s credit in this way would not be recommended for South African insolvency law. This is because all the debtor’s assets vest in the trustee upon sequestration and as it concerns uncompleted contracts, the trustee steps into the shoes of the insolvent and gets to decide whether to continue with a contract or enter into a new contract if it is in the best interest of the creditors of the insolvent estate.
3 2 Discharge and credit limitations in England and Wales
The interest in the English system is compelled by the similarities it shares with the South African insolvency system before the Enterprise Act72 and the USA bankruptcy system. Like the South African insolvency system, bankruptcy in England and Wales was characterised as punitive and carried a social stigma for the bankrupt. Also, a bankrupt debtor was the subject of legal restrictions and disabilities preventing him or her from holding certain offices and appointments.73 Further, as is the case in the USA, England and Wales recognise a distinction between unfortunate debtors and dishonest debtors.
In England and Wales, an adjudged bankrupt receives automatic discharge from all bankruptcy debts after twelve months from the date on which the bankruptcy commenced.74 The discharge not only frees the debtor from bankruptcy debts but also from all disabilities and disqualifications to which he or she was subjected while having a bankruptcy status.75
In England and Wales, automatic discharge can be postponed to a later date. Section 279(3) of the IA 1986 allows an official receiver or the trustee of the bankrupt’s estate to apply to the court for an order to discontinue the one-year automatic discharge period and instead to allow bankruptcy to continue until the end of a specified period or on the fulfilment of a specific condition.76 This situation may arise when it appears that an undischarged bankrupt who is eligible for automatic discharge fails to comply with an obligation to which he or she is subject because of his or her bankruptcy.77 Similarly, in South Africa, on an application by an interested person and after notice to the insolvent, the court may, on good cause, order that rehabilitation will not set in after ten years, in which case the debtor will be insolvent for a longer period.78
Before the 2004 amendments by the Enterprise Act,79 a court could refuse a discharge application made by a bankrupt debtor based on his or her behaviour.80 After 2004, conduct that could have led to a denial of discharge before 2004 now leads to the awarding of a bankruptcy restriction order (BRO) or a bankruptcy restriction undertaking (BRU).
Similar to the South African situation, in England and Wales, a debtor’s bankruptcy status will stay on the debtor’s credit file with credit agencies for six years after the bankruptcy order is made, after which a debtor is required to check with the credit agencies on whether it has been removed. As indicated above, in England and Wales, a debtor obtains automatic discharge after just twelve months from the date on which the bankruptcy commenced.81 This is a reduction from the three years that applied before the 2004 amendments by the Enterprise Act. Thus, this means that after obtaining automatic discharge after one year, a depiction of bankruptcy will remain on the debtor’s credit file for five years after discharge. However, this period is essentially less than the South African period of depiction of the insolvency or rehabilitation on a debtor’s credit file, since in South Africa, it will remain for five years from the date of the sequestration order and five years from the date of the rehabilitation order.
However, if in the case where automatic discharge was postponed and the debtor is still bankrupt after six years, the debtor’s bankruptcy status will stay on the debtor’s credit file until the bankruptcy ends.82 If, on the other hand, a debtor was awarded a BRO or BRU, depiction of these orders may appear on the debtor’s credit file for up to fifteen years.83 However, this only occurs for dishonest debtors.
Also similar to the South African insolvency law is that in England and Wales, a debtor is prohibited from obtaining credit above £500 without disclosing his or her status to the credit provider.84 A debtor is also prohibited from engaging, directly or indirectly, in any business under a name other than that under which he or she was adjudged bankrupt without disclosing to all persons with whom he or she enters into any business transaction the name under which he or she was adjudged bankrupt.85 In addition, these restrictions will apply to a bankrupt after discharge if such a debtor was awarded a BRO.86 Contravening these restrictions amounts to an offence.87 These restrictions were and still are intended to protect public interests generally, especially the business community.88 However, again, automatic discharge in England and Wales occurs after just one year, so the limitation on the debtor’s contractual capacity is reduced, unlike the unreasonable ten-year period in South Africa.
Another similarity with South African insolvency law is that an adjudged bankrupt in England and Wales, although reduced by the Enterprise Act,89 is also subject to some disqualifications during the bankruptcy period. However, the disqualifications only apply to dishonest debtors who have been awarded BRO or BRU.
As indicated, automatic discharge in England and Wales was three years before the 2004 amendments by the Enterprise Act. This reduction to one year was aimed at fast-tracking the rehabilitation of bankrupts whose conduct did not give rise to public concern,90 thereby only providing deserving debtors with a fresh start.91 The reduction also reflects parliament’s awareness that some bankruptcies are caused by misfortune and not by dishonesty.92 Therefore, the main aim was to move away from the ‘one-size-fits-all’ approach that characterised bankruptcy in England93 towards distinguishing between bankrupts based on their culpability, provided that the reasons for a bankrupt’s failure were tested with appropriate rigour.94 This led to the insertion of section 281A and Schedule 4 to the IA 1986 which provides for the awarding of BRO and BRU to debtors whose conduct shows culpability.
Thus, while a discharge is intended to give a debtor a fresh start by restoring his or her ability to enter into contractual relations and engage in trade freely, a debtor’s conduct may lead to an award of a BRO or a BRU, which may impose restrictions on him or her for up to fifteen years from the date of discharge.95 This means that the debtor would not be freed from all the disabilities and disqualifications to which he or she was subject before discharge. Thus, a BRO or BRU has the effect of distinguishing between the honest and dishonest debtor, and only the bankrupt whose conduct justifies a restriction96 will be subjected to all the restrictions on undischarged bankrupts that applied before the Enterprise Act. Another effect of awarding a BRO or BRU is that the order may remain on the debtor’s credit reference file for longer than six years, since the order may be awarded for up to fifteen years.
Thus, the introduction of BROs and BRUs reflects the legislature’s aim to give a fresh start only to the honest and deserving debtor and that those whose bankruptcy is a result of their dishonest conduct should endure the disqualifications and restrictions for a period longer than one year and may remain subject to restriction for a period of between two to fifteen years.97
Therefore, while the position in England and Wales before 2002 was largely similar to the South African position with regards to the restrictions on unrehabilitated insolvents, the position in South Africa has remained the same despite having similar aims and challenges as England and Wales. For example, in both South Africa and England and Wales, the restrictions and disqualifications on bankrupt debtors were and still are intended to protect the public and are justified for the protection of public interests.98 In both South Africa and England and Wales, the need to protect the public was based on the notion of the stigma that a debtor who becomes bankrupt is not a person in whom society can have trust or confidence.99 However, England and Wales have made changes to address these challenges, South Africa has not. This article now discusses discharge (rehabilitation) in South Africa and the credit limitations imposed on rehabilitated and unrehabilitated insolvent debtors.
4 South Africa
4 1 Discharge (rehabilitation) in South Africa
In South Africa, an insolvent debtor is automatically rehabilitated by effluxion of time after ten years have passed, unless the court orders otherwise.100 However, before the expiry of ten years, an insolvent may bring an application by motion to the High Court to be rehabilitated if he or she meets certain requirements.101
Before rehabilitation, which may occur after ten years, the insolvent debtor is subject to numerous restrictions, most of which involve employment disqualifications.102 While the continued responsibility of the debtor during sequestration is intended to monitor his or her financial behaviour and encourage the creditor to provide financing, the extended period is contrary to international trends as it limits opportunity, innovation, and entrepreneurial activity, and a fresh start, as the penalty for failure is excessively harsh.
While the sequestration process is not aimed at granting debt relief to debtors, it is a consequence of the Insolvency Act103 because it puts an end to sequestration.104 It relieves the insolvent of every disability resulting from the sequestration of his or her estate.105 Although the release from the disabilities resulting from the sequestration is in line with international trends, this release only occurs after ten years, and this could limit a true fresh start.106
Subject to conditions the court may have imposed in granting the rehabilitation order, rehabilitation further discharges all the insolvent’s debts that were due or the cause of which had arisen before sequestration and which did not arise from fraud.107 Thus, rehabilitation does not have the effect of releasing debts that arose fraudulently. The exclusion of debts arising from fraudulent activities is in line with international policy considerations that recommend that fraudulent debtors should not benefit from a discharge policy and should be excluded.108
Therefore, rehabilitation is intended to give the insolvent a fresh start, which is the most important characteristic of insolvency for a consumer.109 The court in Ex parte Le Roux pointed out that:
“The effect of rehabilitation of an insolvent is to restore him fully to the marketplace and, more importantly, to the obtaining of credit. The Court is accordingly as concerned with the probable future behaviour of the applicant as it is with his past.”110
The purpose of rehabilitation is thus to restore the insolvent fully into the marketplace and to enable him or her to obtain credit and employment after rehabilitation. However, if there are still estate assets at the time of rehabilitation that have not been realised, they will remain vested in the trustee even after rehabilitation unless the insolvent applied for a vesting order together with his or her rehabilitation application.111
However, an insolvent does not have a right to be rehabilitated.112 The granting of a rehabilitation order lies entirely within the court’s discretion, and the insolvent bears the onus of showing that the discretion should be exercised in his or her favour.113 The court will enquire whether the insolvent is a person who ought to be allowed to trade with the public on the same basis as any other honest person and whether he or she is a fit and proper person to participate in commercial life free of any constraints and disabilities.114 Thus, the insolvent debtor must include sufficient information in his or her application to show that he or she has learnt from the insolvency and understands that the sequestration of his or her estate could have prejudiced his or her creditors.115 The court will take many factors into account in deciding whether to grant the rehabilitation order,116 including how the insolvent conducted trade before insolvency and his or her probable future behaviour.117 Another factor considered by the courts when the court exercises its discretion to grant rehabilitation orders, whether by application or by the effluxion of time, is a benefit or advantage to the body of creditors.118
In Engelbrecht v Naidoo, the court considered an urgent application requesting it to exercise its discretionary power in s 127A(1) to delay or deny the automatic rehabilitation of an unrehabilitated insolvent because such rehabilitation would prejudice the creditors of the insolvent estate and the public since the affairs and transactions of the insolvent had not been investigated thoroughly. Agreeing with the trustee, Du Plessis AJ ordered that Naidoo’s automatic rehabilitation does not set in once the ten years is reached because if he is automatically rehabilitated, he would have escaped accountability to his creditors, the trustees and the Master, thereby evading all the consequences of his insolvency.119 Du Plessis AJ found it sensible to provide Naidoo with the option to, at any time after the ten-year period, apply for his rehabilitation in terms of the Insolvency Act. In such an application, Naidoo would have to prove to the court that he has complied with his obligations under the Act and should be rehabilitated.120 The consideration of the benefit to the creditor’s requirement, also at this final stage of the process, is somewhat disconcerting since this requirement for obtaining a sequestration order in the first place is already subject to much criticism.121
Thus, a rehabilitation order may not be granted if the insolvent’s conduct before and during sequestration shows that he or she is dishonest, fraudulent, and reckless. This is in line with international trends that favour the consideration of the circumstances of the debtor so that a distinction can be drawn between the honest and the fraudulent debtor and only the fraudulent debtor is excluded from discharge.122
Where a South African court has refused a rehabilitation application, it may indicate a period that has to pass before the old rehabilitation application can be renewed, which may vary from three months to three years.123 After that period has passed, the new rehabilitation application may be granted automatically.124 However, in other instances, a court may not indicate a renewal period, leaving it to the insolvent to make another rehabilitation application after a reasonable period and after proof of good conduct.125
4 2 Credit limitations in South Africa
While international policy considerations recommend that countries should include a clear statement on non-discrimination, which should cover a prohibition against discrimination in accessing credit, the labour market and access to housing, when considering policies for natural-person debtors,126 insolvency in South Africa continues to limit the status of an insolvent debtor after rehabilitation. This, by far, is one of the most crippling effects of the sequestration process in South Africa because, in addition to the debtor losing control of his or her assets to the trustee of the insolvent estate during the sequestration process, the debtor’s ability to obtain credit, rent a home and obtain employment127 in certain industries, continues to be limited after sequestration. This is because information about a debtor’s rehabilitation status is displayed on the debtor’s credit record held by a credit bureau. The information held by a credit bureau is generally used by credit providers to determine a consumer’s credit profile and to establish whether a consumer has a good or bad payment history before granting him or her credit.128 This is further exacerbated by the fact that potential employers operating in spheres that require honesty and trust in dealing with finances and cash, may also use the information when considering whether to employ him or her.129 The reasons given by employers for using credit history checks before employing candidates include reducing the likelihood of theft, fraud, embezzlement, and managing liability for negligent hiring.130 Other reasons include assessing the trustworthiness of candidates and compliance with state laws that compel them to do background checks.131
As indicated, the debtor’s full contractual capacity is supposed to resume upon rehabilitation and discharge of debts. At this stage, the ‘supposed’ rehabilitated debtor expects to obtain a new lifeline, where he or she is free to participate in the marketplace again without any limitations. This is especially so because, in South Africa, a debtor can be insolvent for up to ten years or more. However, this is not the reality for the rehabilitated debtor in South Africa, since the NCA contains certain regulations that limit the insolvent’s ability to obtain credit, rent a home, or find employment after rehabilitation and consequently to make a fresh start.132
In 2014, the Department of Trade and Industry published amnesty regulations which allow for the removal of certain adverse consumer credit information133 and a once-off and ongoing removal of information about paid-up judgments from a consumer’s credit report held by a credit bureau.134 The Amendment Act also introduced a process whereby certain adverse consumer credit information and information regarding paid-up judgments may automatically be removed from the credit record of a consumer on an ongoing basis.135 A credit provider must submit all information relating to paid-up judgments continuously to all registered credit bureaux within seven days of receipt of such payment from a consumer,136 and the credit bureaux must remove such information within seven days after receiving proof of such payments.137 Therefore, these regulations were intended to restore blacklisted consumers to their full contractual capacity, thereby enabling them to obtain employment, rent a home, and access credit again. Consequently, adverse information and information regarding paid-up judgments are automatically or immediately removed from a consumer’s credit report held by a credit bureau after a judgment has been paid up, without any action needed by the affected consumer.
The NCR’s removal of the adverse credit information was aimed at benefiting the low and middle-income groups to access credit, such as home loans, educational loans, and increasing employment opportunities.138 The removal was also intended to assist those who could not afford fees for the rescission of judgment debts which had already been paid.139 Therefore, the 2014 Amnesty Regulations were intended to enable blacklisted consumers whose financial circumstances had changed since they could not pay their debt in the past to be able to access credit again, obtain employment and rental housing opportunities that would not otherwise have been possible had they remained blacklisted.140
However, these Amnesty Regulations excluded information about debt restructuring, sequestration, rehabilitation, and administration.141 Since this information was excluded from the amnesty, a credit bureau may publicly display information regarding the sequestration of an insolvent for five years from the date of the sequestration order or until a rehabilitation order is awarded.142 However, the public display of this information by a credit bureau on the debtor’s credit record does not end upon rehabilitation, since the regulations also provide for a continued public display on the debtor’s credit record for a further five years after a rehabilitation order.143 This appears to also be the case even if the insolvent was rehabilitated by effluxion of time after ten years.144 For a debtor expecting a fresh start after ten years of insolvency, this tarnishes any hope of obtaining any new opportunities that were unavailable during sequestration. Not only does this have adverse consequences for a debtor’s livelihood and standing in society, but it also limits the possibility of a true fresh start, as once the discharge has been granted, the debtor should have full access to financial activities immediately.145
4 3 The justification for credit limitations on insolvent debtors during sequestration
The restrictions that the Insolvency Act and other legislation impose on the insolvent because of their insolvency, coupled with the period that must pass before an insolvent can apply for rehabilitation, were never intended as punishment for insolvents.146 Instead, they are intended to protect members of the public,147 particularly the insolvent’s creditors and people having dealings with them as traders.148 Thus, the restrictions were intended to protect the public from reckless debtors and to teach them to trade honestly with others by postponing rehabilitation until they have understood the error of their ways.149 Consequently, the aim is to protect the public against dishonest debtors who have created the perception that all bankrupts are dishonest people who trade fraudulently with the public and who often maliciously acquire credit without any reasonable intention of repaying it.150
This deviates from the social norm that individuals keep promises and pay back their debts.151 This negative view of bankrupts and the numerous restrictions imposed on insolvent debtors created the stigma152 that bankrupts are irresponsible people who cannot be trusted.153 Unfortunately, insolvency is viewed through the lens of fault,154 and the stigma is based on society’s assumption that the insolvent debtor was in control of the circumstances that led to his or her insolvency.155 It ignores the reality that, especially in modern times, insolvency may be caused by involuntary job loss,156 terminal illness (which may require time off from work), caregiving to a terminally ill family member, lack of adequate insurance, divorce, or death.157
As South African insolvency law does not distinguish between honest and dishonest debtors, the stigma affects all insolvent debtors, including honest but unfortunate debtors. The result is that the restrictions, including credit limitations, apply to all insolvent debtors, including honest debtors to whom they were never intended to apply.
4 4 The right to equality of rehabilitated debtors
Section 9 of the Constitution158 guarantees the right to equal protection and equal benefit of the law for all persons. This includes the full and equal enjoyment of all rights and freedoms.159 In addition, it prohibits unfair discrimination,160 whether direct161 or indirect,162 and provides that any discrimination on the grounds listed in section 9(3) is unfair unless it is established that it is fair. 163
A distinction is made between formal equality and substantive equality. 164
Formal equality refers to ‘sameness’ of treatment, which simply means that all persons who are in the same situation must be treated alike.165 In addition, people should not be treated differently based on arbitrary characteristics.166 Formal equality affords all people equal rights, and the view is that inequality can be eliminated by extending the same rights and entitlements to all, following the same neutral norm or standard of measurement.167
Formal equality is aligned with the World Bank Report’s recommendation that individual debtors who are in similar situations should be treated similarly. As already indicated, rehabilitated debtors in South Africa are treated differently from non-debtors and from other debtors, like those who have paid their judgment debts, who are under debt restructuring and administration, in that after the sequestration process has ended, the display of the insolvent’s status in the credit bureau is changed to rehabilitated insolvent. Whereas the other debtors’ status displaying judgment debt, debt restructuring or administration is removed without being replaced with a further hindering status. In addition, the rehabilitated status display remains for five years. To place rehabilitated debtors on an equal basis with non-debtors and with other debtors in similar situations, the public display of their rehabilitation status should either be removed, reduced to three years or should only apply to dishonest debtors.
The immediate removal of the hindering status would not only place rehabilitated debtors on an equal footing as non-debtors and other debtors, but it would give effect to a true fresh start, which should be immediate after discharge (rehabilitation). Currently, a true fresh start for rehabilitated debtors in South Africa is an ideal, not a reality, since credit providers may consider the status before granting credit. The hindering status may also hinder the rehabilitated debtor from obtaining employment, since it may also be considered by some employers.
Reducing the display of the hindering status from five years to three years168 would balance the interests of the public (to prevent the granting of credit to debtors who cannot afford it, or to fraudulent debtors) with the interests of the insolvent debtor to receive a fresh start, although delayed, by re-establishing the debtor’s economic capability.
On the other hand, allowing the display of the hindering status for only dishonest debtors would align with the fresh start principle of providing a fresh start to deserving debtors only. It would ensure that only the dishonest debtor is punished, and the honest but unfortunate debtor receives the full benefits of an insolvency system and is not counted and punished with the dishonest debtors. This is especially so, in circumstances similar to the Englebright v Naidoo case, where a debtor had been so uncooperative during the sequestration process that the trustee of his insolvent estate could not administer the estate within ten years.
Substantive equality, on the other hand, requires a contextual analysis. It shifts the enquiry from an abstract comparison of ‘similarly situated individuals’ to an examination of the actual impact of an alleged rights violation within the actual socio-economic condition.169 Above all, substantive equality considers the impact of the right violation on the human dignity of a person.
The need to treat rehabilitated debtors equally with non-debtors and other debtors goes beyond differential treatment of debtors who are similarly situated. For possibly ten years, an insolvent debtor’s contractual capacity is hindered, limiting them from obtaining credit, accessing housing and accessing certain labour markets. Section 26 of the Constitution provides for the right to access adequate housing. The right to access adequate housing goes hand in hand with the right to human dignity in section 10 of the Constitution, as having a home dignifies a person. The display or the prolonged display of a debtor’s rehabilitated status in their credit record, unjustifiably limits a debtor’s right to access adequate housing and the right to human dignity.
Section 22 of the Constitution guarantees all people in South Africa the right to choose their trade, occupation, and profession freely, and only the law may regulate the practice of such trade, occupation, or profession. Section 22, thus, protects the right to employment170 and a person’s employment is an essential component of his or her identity, self-worth, and emotional well-being.171 Therefore, the display or the prolonged display of a debtor’s rehabilitated status in their credit record also limits the debtor’s right to work and human dignity, since some potential employers consider a debtor’s credit record before employing candidates.
Therefore, while differentiation in respect of credit during a sequestration can be justified on public policy grounds, after sequestration or rehabilitation, it amounts to unjustified discrimination.172
5 Conclusion
It is clear from the discussion above that although the fresh-start policy aims to give the honest but unfortunate debtor a fresh start through a discharge of debts, it does not provide debtors with a completely clean slate, as there are a few limiting factors. These include the display of a rehabilitated debtor’s status in his or her credit history report, employment discrimination after rehabilitation that is caused by a public display of a debtor’s rehabilitation status, and laws that increase the stigma attached to bankruptcy (failure to remove information about sequestration and rehabilitation in the Amnesty Regulations). These limitations after rehabilitation may amount to unfair discrimination, for instance, in accessing credit.
For the reasons advanced in the discussion above, this aspect, coupled with the long ten-year period prescribed for automatic rehabilitation in South African law, may be questioned, and it is submitted that these, amongst others, should be considered for law reform.
At the centre of such considerations should be the fact that rehabilitation is more than just the discharge of pre-sequestration debts. The law should provide for a proper “fresh start,” and this necessarily raises questions about post-rehabilitation income and access to credit. These factors are essential for an insolvent person’s reintegration into the economy and society.
A further issue is whether South African insolvency law should differentiate between honest and dishonest insolvents. What should happen to their credit records? Should all credit listings be removed automatically for every rehabilitated insolvent? Should there be a shortened listing period? Or should the law distinguish between honest and dishonest debtors?
As indicated, the immediate removal of the credit listing would not only place rehabilitated debtors on an equal footing as non-debtors and other debtors, but it would give effect to a true fresh start. At the same time, shortening the listing period would balance the interests of the public with the interests of the rehabilitated debtor to receive a fresh start, although delayed. On the other hand, displaying the credit listing for only dishonest debtors would align with the fresh start principle of providing a fresh start to only deserving debtors and ensuring that honest debtors are not counted and disadvantaged with the dishonest debtors.
Of course, if one argues that a dishonest insolvent should remain unrehabilitated for a longer period, then the related question is whether such a debtor should benefit at all from ultimate rehabilitation. This becomes part of the broader debate: how should the law balance accountability with the policy goal of enabling a meaningful fresh start?
1. World Bank Working Group on the Treatment of the Insolvency of Natural Persons Report on the Treatment of the Insolvency of Natural Persons (World Bank, Washington DC 2013) (World Bank Report) para 359.
2. Such as freeing the debtor from excessive debt, placing debtors on an equal basis with non-debtors and enabling them to avoid again becoming overindebted.
4. Section 137(a) of the Insolvency Act 24 of 1936 (Insolvency Act); S v Clifford 1976 1 SA 695 (A) 703B; S v Saunders 1984 2 SA 102 (T) 104H; Wetsgenootskap van die Goeie Hoop v Reneke 1990 4 SA 441; Reyneke v Wetsgenootskap van die Goeie Hoop 1994 1 SA 359 (A); Bertelsmann et al Mars: The law of insolvency in South Africa (2019) para 28.8; Roestoff “Insolvency restrictions, disabilities and disqualifications in South African consumer insolvency law: A legal comparative perspective” 2018 THRHR 399.
5. Regulation 17(1) of the National Credit Act Regulations, GN R489 in GG 28864 of May 2006, substituted by GN R1209 in GG 29442 of November 2006 and amended by Regulation Gazette No 10382 in GG No 38557 of March 2015 (NCA Regulations); Roestoff “Insolvency restrictions” 2018 THRHR 400; Kelly-Louw “The 2014 credit-information amnesty regulations: What do they really entail?” 2015 De Jure 96.
7. Mabe A comparative analysis of an insolvent’s capacity to earn a living within the South African constitutional context (PhD thesis 2022 University of Pretoria), para 1.1.1.
9. Bertelsmann (2019) para 25.12; Smith, Van der Linde & Calitz Hockly’s Law of insolvency, winding-up and business rescue (2022) 225.
10. Local Loan Co v Hunt 292 US 234, 244 (1934); Stellwagen v Clum 245 US 605, 617 (1918); Orovitz S “The Bankruptcy shadow: Section 525(b) and the job applicant’s Sisyphean struggle for a fresh start” 2013 Emory Bankr Dev J 553; Mols “Bankruptcy stigma and vulnerability: Questioning autonomy and structuring resilience” 2012 Emory Bankr Dev J 305; Mabe A can comparative analysis, para 2.2.2.
16. See para 4.3 below regarding the justification for credit limitations imposed on insolvent debtors.
17. Roestoff “Rehabilitation in South African consumer insolvency law: International trends and guidelines” 2016 LitNet Academia para 5.3.
29. World Bank Report paras 370-371 and 454. Debtors are required to disclose their economic affairs in the insolvency procedure on the penalty of being denied a discharge. Some countries deny discharge based on the debtor’s behaviour. This occurs when the debtor has incurred debt in an unscrupulous manner or in a way that the court regards as obviously and objectively reckless or speculative.
30. World Bank Report para 371. The aim is to make sure that a discharge is not denied to debtors who genuinely need it.
36. Rule 4004 of the Federal Rules of Bankruptcy Procedure; Porter & Thorne “The failure of bankruptcy’s fresh start” 2006 Cornell LR 76.
47. Such as family obligations like domestic support, tax debts, and debt fraudulently incurred. See s 523 of the Bankruptcy Code.
54. The removal of adverse consumer credit information and information relating to paid-up judgment Regulations, GN R144 in GG 37386 of 2014 (Amnesty Regulations). See para 4.2 below.
55. Ferriell & Janger (2013) 4 and 527. Concepción “Pre-employment credit checks: Effectuating disparate impact on racial minorities under the guise of job relatedness and necessity” 2010 The Scholar 529.
62. Congressman Steve Cohen “HR 3862 -- 116th Congress: Equal Employment for All Act of 2019” www.GovTrack.us. 2019. March 15 2021 https://www.govtrack.us/congress/bills/116/hr3862 (accessed 15-03-2021).
63. Senator Warren, Representative Cohen Reintroduce Equal Employment for All Act 28 July 2023 https://www.warren.senate.gov/newsroom/press-rele ases/senator-warren-representative-cohen-reintroduce-equal-employment-for-all-act#:~:text=Washington%2C%20D.C.%20%E2%80%94%20To day%2C%20U.S.,get%20back%20in%20the%20game.%E2%80%9D (accessed 04-02-2025)
72. The Enterprise Act 2002 (Enterprise Act) abolished many of the restrictions that applied to adjudged bankrupts in England and Wales. See ss 266-267 of the Enterprise Act. Most of the disqualification after the Enterprise Act only ensue if a bankruptcy restriction order (BRO) or a bankruptcy restriction undertaking (BRU) is made or given.
73. Committee Report of the Review Committee on Insolvency Law and Practice (1982) Cmnd 8558 (Cork Report) paras 131-132; Productivity and Enterprise: Insolvency - A Second Chance, Cm 5234 (2001) (Second Chance Report) Annex A: examples of current restrictions on bankrupts; Fletcher The law of insolvency (2017) 370-372; Miller & Bailey Personal insolvency: Law and practice (2008) 455-463.
74. See s 279(1) and 382(1)(a) and (b) of the Insolvency Act of 1986 (IA 1986); Secretary of State for Work & Pensions v Balding 2007 EWCA Civ 1327; Secretary of State for Work and Pensions v Payne 2012 2 WLR 1; Fletcher The Law of insolvency 338.
79. The Enterprise Act 2002 (Enterprise Act) abolished many of the restrictions that applied to adjudged bankrupts in England and Wales. See ss 266-267 of the Enterprise Act. Most of the disqualifications after the Enterprise Act only ensue if a bankruptcy restriction order or a bankruptcy restriction undertaking is made or given.
82. This may be the case in terms of s 279(3) of the IA 1986 where automatic discharge was postponed until the end of a specified period or on the fulfilment of a specific condition.
88. Para 1.21 of the Productivity and Enterprise: Insolvency - A Second Chance Cm 5234 (2001) (Second Chance Report).
89. Before the Enterprise Act an adjudged bankrupt was automatically disqualified from being an insolvency practitioner (s 390(4)(a) and 389 of the IA 1986), Member of Parliament (s 427 of the IA 1986), chairman of a land tribunal (Agriculture Act 1947), school governor (Education (School Government) Regulations 1989), member of a regional or local flood defence committee (Environment Act 1995), member of an internal drainage board (Land Drainage Act 1991), estate agent (Estate Agents Act 1979), practising solicitor (Solicitors Act 1974), pension trustee (Pensions Act 1995), member of a local authority (s 80(1)(b) of the Local Government Act 1972 (Local Government Act)), member of the UK National Board of Nursing, Mayor or member of the London Assembly (s 21(1)(c) of the Greater London Authority Act 1999), or a justice of the peace (Justice of the Peace Act 1997 (Justice of the Peace Act)).
95. Para 4.2(b) of Sch 4A to the IA 1986. In February 2022 the Insolvency Service punished 32 bankrupt individuals for excessive gambling or unnecessarily extravagance by subjecting them to BROs to prevent them from resuming the gambling, rash speculation, or extravagant spending that contributed to their bankruptcy. See “Insolvency Service punishes 32 bankrupt individuals for gambling” https://bit.ly/3KMvZOX (accessed 16-03-2022).
101. S 124 of the Insolvency Act. For some of the grounds of rehabilitation by court application see for instance, Kruger v The Master NO: Ex parte Kruger 1982 1 SA 754 (W) and Ex parte Anderson 1995 1 SA 40 (SE). For a further discussion, see Bertelsmann et al Mars para 25.6.10.
103. Nel An Analysis of the legislative mechanisms available to individual debtors in terms of the South African Law (LLM Dissertation (University of South Africa 2006) 3.
106. Coetzee A Comparative reappraisal of debt relief measures for natural person debtors in South Africa (LLD-dissertation (Pret) 2015) 152.
113. Ex parte Hittersay 1974 4 SA 326 (SWA) 328; Ex parte Snooke 2014 5 SA 426 (FB) 437; Ex parte Fourie 1937 OPD 25; Ex parte Linström 2014 JOL 32526 (FB) para 5; Ex parte Purdon 2004 JDR 0115 (GNP) 5.
114. Ex parte Heydenreich 1917 TPD 657 658; Ex parte Fourie 45; Greub v The Master 1999 1 SA 746 (C) 75; Ex parte Snooke 437; Ex parte Harris v Fairhaven Country Estate (Pty) Ltd (intervening party) 2016 JDR 0159 (WCC) 84. See also Roestoff “Rehabilitation of an insolvent and advantage to creditors under the Insolvency Act 24 of 1936: Ex parte Purdon 2014 JDR 0115 (GNP)” 2018 THRHR 313.
117. Ex parte Heydenreich 657; Ex parte Fourie 43; Greub v The Master 752; Ex parte Snooke 437; Ex parte Harris 84.
118. See Ex parte Purdon para 15 discussed by Roestoff 2018 THRHR 306 314; see also Ex parte De Villiers 2024 2 All SA 67 (NWM) (9 February 2024) paras 30-33; and Mabe & Boraine “Automatic rehabilitation, not so automatic; Engelbrecht NO v Naidoo [2023] ZAGPJHC 866 (3 AUGUST 2023)” 2023 SAJEJ 106.
121. Roestoff & Coetzee “‘Advantage to creditors’ and the Insolvency Act 32 of 1916: Lessons to be learned” 2023 De Serie Legenda: Developments in Commercial Law 1 et seq; Boraine & Roestoff “Revisiting the state of consumer insolvency in South Africa after twenty years: The courts’ approach, international guidelines and an appeal for urgent reform” 2014 THRHR 351 and 527.
127. S 23(3) of the Insolvency Act allows an insolvent to follow any profession or occupation or to enter into any employment in the business of a trader who is a general dealer or manufacturer during sequestration, provided that he or she obtains the written consent of his or her trustee. Amongst others, an unrehabilitated insolvent is also disqualified from acting as a trustee in an insolvent estate (s 55(a) and 58(a) of the Insolvency Act), business rescue practitioner (s 138(1)(d) of the Companies Act 71 of 2008), director of a company if an exemption from the court has not been granted (s 69(8)(b)(i) and 69(11) of the Companies Act) and s 46(2) of the NCA disqualifies a person from registering as a credit provider, debt counsellor, or payment distribution agent.
128. Kelly-Louw 2015 De Jure 93; Asheela Towards responsible lending in Namibian consumer credit law: A comparative investigation (LLD Thesis 2017 University of Pretoria) 143 on credit information that may be kept by a credit bureau. Reliance on credit bureau information before granting credit to a person without considering other factors that have a real impact on that person’s financial position such as divorce, loss of employment, illness or death of a family member is not the desired course of action. See Boraine & Van Wyk “Credit Bureaus in South Africa and Namibia: A comparative analysis of the regulatory frameworks evaluated against the world bank principles for credit reporting” (Part 1) 2017 CILSA 153.
130. Cain “The bankruptcy of refusing to hire persons who have filed bankruptcy” 2017 Amer Bankr Law J 659. Orovitz 2013 Emory Bankr Dev J 573.
135. S 71A of the NCA inserted by the National Credit Amendment Act 19 of 2014. Reg 2(a)(ii) of the Amnesty Regulations.
142. NCA Regulations, reg 17(1); Roestoff “Insolvency restrictions” 2018 THRHR 400; Kelly-Louw 2015 De Jure 96.
152. Stigma operates in bankruptcy as a product of competing social and economic norms and finite resources. Social norms dictate that individuals keep promises and pay back debts; but society emphasises consumption and makes credit readily available to those borrowing beyond their means. See Mols 2012 Emory Bank Dev J 293; Osunlaja A comparative appraisal of debt relief measures for NINA debtors in Nigeria (LLD Thesis (Pret) 2020) 7.
158. Section 9(1) of the Constitution of the Republic of South Africa, 1996 (Constitution); Currie & De Waal The bill of rights handbook (2016) 210-215.
161. Direct discrimination occurs when there is a direct and explicit relationship between the distinction and the prohibited ground. Meskin et al Insolvency law and its operation in winding-up (November 2025) para 4.8.2.1. See also Smith “Equality constitutional adjudication in South Africa” 2014 AHRLJ para 2.1.
162. Indirect discrimination occurs when conduct that may appear neutral and harmless nevertheless treats people unequally based on other attributes or characteristics (unrelated to the specified grounds) that have the effect of impairing their fundamental human dignity as human beings or impacts people harmfully in a comparably serious manner. See Harksen v Lane 1998 1 SA 300 (CC) para 46; De Vos & Freedman South African constitutional law in context (2014) 446, 448; Meskin et al Insolvency law para 4.8.2.1.
165. This is an Aristotelian concept of equality, like cases should be treated alike. Cheadle et al South African constitutional law: The bill of rights (Butterworths Last updated November 2020) para 4.3.1; Currie & De Waal (2016) 213; Smith (2014) AHRLJ 611.
169. Albertyn “Contested substantive equality in the South African Constitution: Beyond social inclusion towards systemic justice” 2018 SAJHR 2; Currie & De Waal (2016) 213.
171. In Affordable Medicines Trust v Minister of Health 2009 3 SA 247 (CC) para 59, the Constitutional Court noted: “Freedom to choose a vocation is intrinsic to the nature of a society based on human dignity as contemplated by the Constitution. One’s work is part of one’s identity and is constitutive of one’s dignity. Every individual has a right to take up any activity which he or she believes himself or herself prepared to undertake as a profession and to make that activity the very basis of his or her life. And there is a relationship between work and the human personality as a whole. ‘It is a relationship that shapes and completes the individual over a lifetime of devoted activity; it is foundation of a person’s existence’.”
172.
