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Article by listed attorney: Fawzia Khan

Many South Africans are often lured into taking advantage of credit facilities, but later could find themselves facing summons due to their inability to maintain their agreed monthly payments. We unpack some aspects of the debt recovery laws which consumers should find useful. Should you receive a letter of demand from a creditor you could make an offer to pay the debt in instalments and admit liability in terms of Section 57 of the Magistrates Court Act and also agree to have judgment taken against you, in the event that you fail to pay the agreed instalments. Once the creditor accepts your offer in writing, then no further legal proceedings can be taken against you. Similarly if you are served with a summons for a monetary debt, then in terms of Section 58, you can as a debtor consent to judgment and have an order to pay off the debt in instalments. If you breach the terms and not pay the agreed instalments, then the creditor would be allowed to approach the clerk of the court to grant judgment by default.

If the debt arose through the granting of finance, for example buying a car, a house or any item where The National Credit Act would be applicable, then a creditor cannot issue summons without first delivering a notice to the debtor, ostensibly to explore ways to resolve the issue of arrears. This step is compulsory and is commonly referred to as the Section 129 notice. In terms of this notice, the debtor is invited to refer the matter to a debt counsellor so that the parties may resolve the dispute and agree on a plan to bring payments up to date.  Thus in dealing with defaulting debtors, Section 129 removes a creditors normal common law as well as any contractual rights which would be ordinarily available to him. Where the National Credit Act applies, the court is compelled to first establish whether or not there has been compliance with the provisions of Section 129. If there was no compliance, the court has the discretion to decide what steps should be taken. The matter would then be adjourned and all litigation proceedings can only resume after the creditor complies with the court’s ruling on the matter.

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