What Actions Creditors Can Take Against You

In an ideal world, we all pay our debts diligently every single month like law-abiding citizens. However, life has a habit of throwing at us some big, unexpected curve balls which could make paying our debts on time a little bit more difficult or even impossible.

The unfortunate truth is that there is no simple exemption from paying your debt, even if you have lost your job or all your money in a risky investment.

Debt is debt and if you have it, you need to pay it. Only under extremely specific circumstances are you able to have your debt cleared.

The question is, what actions are creditors allowed and not allowed to take against you, when you owe them money?

In this article, our debt collectors in South Africa discuss this topic in detail.

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What Actions can Creditors Take Against You when You Cannot Pay?

Request Goods to be Returned

Goods purchased on a hire purchase agreement can be returned to the creditor you purchased it from if you are unable to continue paying the instalments as per your agreement.

The creditor may then resell the item at a fair market price in order to offset your debt with them.

Suspend your Credit Facility

Credit cards and store accounts can be suspended in circumstances where you, the debtor, fails to pay your instalments timeously and regularly.

If this happens, you will not be able to use your credit card or store account until you have caught up with all your payments.

Contact You in Writing with a Payment Plan Proposal

Creditors are obliged to send you a written notice informing you that you are defaulting and offering you an alternative solution such as a revised payment plan which extends the term of the loan and, in turn, reduces your monthly instalment.

In addition, the letter must include a referral to a debt counsellor who can determine if you qualify for debt review. Creditors must follow this step if they wish to have grounds for further legal action should you not comply.

As a debtor, the worst thing you can do is ignore these letters. Maintain a relationship of good faith by staying in communication with your creditors so that you can work together to find a solution.

Issue a Letter of Demand

This is known as a final notice before the creditor will take further legal action against you. A letter of demand serves to give you a final opportunity to pay your debt before they sue you. If you do not comply, court proceedings may follow.

Issue a Summons

If you fail to respond to the previous requests to settle your debt, the creditor may issue you with a summons to appear in court.

The summons will tell you when and where you need to go for your hearing as well as what the following steps will be should you not appear in court on the stipulated date.

Appeal to a Court for Judgement

Only if you have not responded to the creditor’s written notices as described above within 10 business days, and if you have been in default for longer than 20 business days, may the creditors approach the court for an order to enforce the credit agreement in an official judgement.

The judgement will be valid for 30 years and will clearly state that you have not paid your debt as per the credit agreement. This will remain on your credit record for a number of years.

Request an Emoluments Attachment Order (EAO)

Also known as a garnishee order, this is where the creditor requests your employer to deduct money from your monthly salary and to pay the creditor with that money on your behalf.

You have to offer informed consent and willingly agree to the EAO for them to proceed.

Request a Warrant of Execution to Attach Goods

Once a judgement has been granted, a creditor may apply for a warrant which allows the sheriff to attach assets such as your furniture in order to pay for your debts.

This can only be done if the creditor has followed all the preliminary steps that are required from them.

Able Tracers Debt Collection – Debt Collection Services South Africa

As registered debt collectors in South Africa, we adhere strictly to all debt collection procedures and regulations to ensure both we and our clients stay within the important framework of the law.

Please contact us if you have any questions about the debt collection process in South Africa as well as what your rights are as a creditor seeking to collect debts from debtors.

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