A consumer who enters into a valid credit agreement with a credit provider, is obliged to pay in respect of the terms of the credit agreement. Failure to do so will result in the credit provider proceeding with legal steps against the consumer to collect on the payments due, in terms of the National Credit Act. This is known as debt enforcement.
There are many reasons why a consumer may default in his payments to a credit provider. Notwithstanding these reasons, the credit provider must follow certain procedures to enforce the agreement.
The first step, is for the credit provider to deliver to the consumer a written notice in terms of Section 129(1)(a) of the National Credit Act 34 of 2005 (“NCA”), notifying the consumer of the default and proposals as to what the consumer may do to resolve any disputes that he/she may have with the agreement or to work out a plan for the payments due under the agreement to be brought up to date. The consumer has ten business days to respond to the credit provider once he/she has received the letter. It must be noted though, that the consumer is under no obligation to respond to the notice in terms of Section 129(1)(a) (“the S129 notice”).
The consumer must be in default with his/her payment for at least twenty business days in terms of S130(1)(a) of the NCA, before the credit provider can deliver the S129 notice to the consumer.
The consumer must further be aware that the credit provider is legally bound to deliver the notice in terms of the S129 notice to the address of the consumer that is cited on the credit agreement – the address that the consumer chose when he/she signed the agreement.
The S129 notice, in terms of the Act, must be delivered to the consumer via registered post. The word “delivered” has been interpreted by the courts to give clarity, viz, the notice is to be dispatched to the correct post office for the address chosen by the consumer, when the credit agreement was signed, or to an adult at the location designated by the consumer, when the credit agreement was signed. Should the credit provider follow one of the above methods for delivery of the S129 notice, but the consumer failed to receive it by not collecting the notice from the post office, it would not be the fault of the credit provider and it would be deemed that the credit provider followed the “letter of the law” and would thus be within its rights to proceed with the issuing and serving of the summons.
Thus, it is not a defence for the consumer to raise that the notice was not delivered to him/her, as was explained by the Constitutional Court in the case of Kubyana v Standard Bank of South Africa Ltd, after revisiting the majority decision held by the Constitutional Court in the case of Sebola and Another v Standard Bank of South Africa Ltd and Another.
It falls upon the shoulders of the consumer to inform the credit provider, in writing, by hand or electronic mail, of any changes to his/her designated address in respect of receiving notices which defer from the credit agreement, to enable the credit provider to change the consumer’s records. Should the consumer not inform the credit provider of the new details, the credit provider will be bound to use the address as per the credit agreement and the consequence of this, is that the consumer will not receive the S129 notice, and when the ten business days have expired for the consumer to timeously give the credit provider his intentions of how he/she wishes to deal with the default payments, the credit provider will be within its rights to proceed with the issuing and serving of the summons, incurring legal costs for the account of the consumer.
This was held in the court case of Robertson v Firstrand Bank Ltd t/a Wesbank.
This article is a general information sheet and should not be used or relied upon as 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 financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)