No new cars, loans for maintenance defaulters as plan to get credit bureaus on board is inked

With 70% of parents defaulting on child maintenance in the first two years of the court order, the department of justice and Social Justice Foundation are going ahead with a plan to blacklist defaulters with credit bureaus. 

The two entities and the Consumer Profile Bureau signed a memorandum of understanding on Friday to have defaulting parents blacklisted. The move will take some time to come into full effect, however, as the state needs to develop a system to facilitate it. 

The department said the signing of the MOU marked the “commencement of a groundbreaking epoch where the department will develop a system to facilitate the forwarding of the details of people against whom child maintenance enforcement orders have been granted to a partner credit bureau who will in turn make this information available to all other credit bureaus and credit providers”.

This would affect defaulters’ ability to get credit. The move is aimed at implementing the provisions of the Maintenance Act.

“Both the civil and the criminal provisions of the act have provisions which require the forwarding of personal details of the maintenance defaulters who fail to pay child maintenance and have enforcement order judgments against them to the credit bureaus and credit providers,” said minister Thembi Simelane's spokesperson Tsekiso Machike.

Speaking to Sowetan, Social Justice Foundation executive director Anneke Greyvenstein said they have picked up that 70% of those with maintenance obligations default in the first two years.

“Parents do not disclose that they have a maintenance obligation, but now it is going to reflect on your credit profile and the credit provider must take this into consideration when they do the affordability assessment and see if you qualify to buy,” she said.

This was not going to happen immediately as they would need to build a database and educate the public, she added.

“This initiative started in 2006. We lobbied for legislative reforms, and in 2015 the National Credit Regulator regulations and the Maintenance Act were amended. “Maintenance obligations must now form part of affordability assessments and maintenance defaulters must be reported to credit bureaus.”

Greyvenstein said it was worrying that defaulters complained to courts that they did not have money for maintenance because they had other obligations, like paying for vehicles and homes.

“With this partnership there will be a bridge between what is happening in our family court and what is happening in the credit industry so we can start looking after our next generation.

“If there is a maintenance obligation, it is going to reflect on the credit record, and when one applies for credit for a new car or a new home or even to increase their clothing account, what should happen is that the person won't get credit if they are not paying for maintenance.” 

She said the foundation would work with parents and the courts to collect information on those who have maintenance obligations. The information will only be available to the credit bureau and not to the public. 

Meanwhile, Felicity Guest, founder of Child Maintenance Difficulties SA, said while she welcomes the blacklisting of defaulters, she does not agree if a private company owns the data.

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