A: When you are in arrears with a credit agreement, the In Duplum rule regulates the amount that you are responsible to repay to that creditor. Its aim is to prevent the creditor from demanding an unlimited amount (unlimited interest) of repayment from individuals who have fallen behind on their credit agreement.
There are two In Duplum Rules:
1. The common law In Duplum Rule.
2. The statutory In Duplum Rule in section 103(5) of the Act.
1. The Common Law In Duplum Rule:
Your debt’s interest will stop to run when the total amount of the arrear interest has accumulated into an amount equal to the outstanding principal debt.
So in the common law In Duplum Rule the amount repayable is:
- The outstanding amount at the time when you fell behind on payments.
- And interest equal to the amount of the outstanding amount at the time when you fell behind on the payment.
(If you have been charged the maximum amount allowed and then repay some, but not all, of the arrears, interest could be charged again until the maximum amount is reached once more).
This rule applies to:
- Debt that isn’t a credit agreement.
- Credit agreements entered into before 1 June 2007.
2. The Statutory In Duplum Rule
This Rule takes the creditor’s initiation fee, service fee, interest, credit insurance, default admin charges and collection costs into account when calculating the maximum repayable amount.
So, the amount you will have to repay is:
- The principal debt that is still due at the time you fell behind on your payments.
- Plus the above-mentioned fees, which will be equal to the principal debt that is still due.
Please note, however, there is still a disagreement between Debt Counsellors and Creditors on how this rule should be enforced. Therefore, the enforcement of this rule will be problematic until a Court provides a judgement about the rule and its implementation.