In article 7 we cautioned against debt collectors attempting to repossess your property. This tends to be a problem with motor vehicles for good reason. Creditors do not need to repossess your credit card, they can deal with that electronically, and of course brick and mortar houses do not have wheels. So, if you are in arrears with the payment of something that you have bought on credit what are your rights? How should you deal with the problem?
Let’s first go back before the National Credit Act 34 of 2005 (NCA) to the Magistrates Court Act 34 of 1944 (The monetary jurisdiction of a Magistrates Court is R200,000.00, Regional Divisions between R200,000 and R400,000. Above that it will be a High Court matter). Chapter V111 talks about the recovery of debts. [S56] deals with the letter of demand. The cost of the letter of demand, sent by an attorney (not a debt collector), is only recoverable if the demand is sent by registered mail and the amount of such fees and costs was stated in the letter of demand. This was traditionally the start of the legal process to recover the debt.
Further, [55A.] provides for factors to be taken into account when considering an order which is just and equitable for debt recovery. A court must take into account when considering whether an order is just and equitable, not limited to,
(a) the size of the debt;
(b) the circumstances in which the debt arose;
(c) the availability of alternatives to recover the debt;
(d) the interests of the plaintiff or judgment creditor;
(e) the rights and needs of the elderly, children, persons with disabilities and households headed by women;
(f) social values and implications;
(g) the amount and nature of the defendant or judgment debtor’s income;
(h) the amounts needed by the defendant or judgment debtor for necessary expenses and those of the persons dependent on him or her and for the making of periodical payments which he or she is obliged to make in terms of an order of court, agreement or otherwise in respect of his or her other commitments; and
(i) whether the order would, in the circumstances of the case, be grossly disproportionate.
This gives you, the debtor, a lot to work with. Now let’s look at the NCA. [S129(1)] as amended (Act 7 of 2019) sates ‘‘If the consumer is in default under a credit agreement, the credit provider- (a) may draw the default to the notice of the consumer in writing and propose that the consumer refer the credit agreement to the National Credit Regulator for debt intervention, a debt counsellor, alternative dispute resolution agent, consumer court or ombud with jurisdiction, with the intent that the parties resolve any dispute under the agreement or develop and agree on a plan to bring the payments under the agreement up to date’’.
What is the purpose of the NCA? According to the Act itself “to promote a consistent enforcement framework relating to consumer credit”. Or to read it another way; creditors, stop running to the courts and sort the problem out with the debtor like adults. Use the courts as a last resort.
[129(5)] The notice contemplated in subsection (1)(a) must be delivered to the consumer—
(a) by registered mail; or
(b) to an adult person at the location designated by the consumer.
(6) The consumer must in writing indicate the preferred manner of delivery contemplated in subsection (5).
In summary, when it comes to repossessions;
- A creditor cannot just take legal action at a whim.
- You have to receive a S129 letter in the manner that you choose.
- Only a court can remove your property.
- Never hand over to debt collectors.
Finally, we must in our opinion point out one flaw in the NCA. S129 does not allow you to negotiate a repayment plan yourself. That said, that would always be our first approach. If you are being reasonable, it will almost always succeed. Remember the Ryts maxim, if you owe, and you can, then you must pay.
