If the account of a consumer is in arrears with a registered Credit Provider, the Credit Provider will make a decision to commence with legal proceedings due to the default by the consumer. The consumer will receive a Section 129 Notice (where applicable) which will be issued in terms of the National Credit Act, which will be followed by a summons.
Once legal action has commenced against a consumer, it often discourages the consumer and more often than not the consumer will do nothing as they are not able to afford the monthly instalments anymore. The consumer will immediately think that they will lose everything as they have breached the agreement.
In most instances the debtor is wrong in thinking that once a breach has occurred that there is nothing that can be done. Credit Providers are very amenable and their goal is always to find better ways to assist defaulting consumers as they are aware of how ever changing economic conditions impact consumers. They will try their best to find solutions that will be beneficial to both parties.
Most of the major financial institutions have implemented programmes by which you can market and sell your property effortlessly in order to achieve the highest possible price and they also offer discounts on shortfall amounts if the balance has not been settled in full.
A settlement agreement which is an agreement signed by the Credit Provider and consumer in order to address the breach that has occurred, can also be signed.
Parties to a written settlement agreement can come to an agreement to settle their dispute at any time, including after proceedings have commenced and before trial.
Credit Providers tend to try and assist and re-build relationships between them and the consumers. After a settlement has been concluded the relationship between the parties will continue on the new terms as stipulated in the written settlement agreement.
Settlement agreements can also be made an order of court to give effect to the agreement.
A settlement agreement entered into between two parties and made an order of court, is final and binding and the aggrieved party is entitled to apply to court to enforce it in accordance with the procedure set out in the settlement agreement and Court Order.
Once a consumer receives a notice that they have defaulted on their agreement with the Credit Provider, they should immediately make any form of contact with the Credit Provider to address the default and to try and come to some sort of settlement arrangement.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)