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Knowing Credit: Defaulting [Part 1/4] Dangers of Defaulting

Posted: 15 Feb 2018

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Welcome to our new series Knowing Credit. In this lesson, we will be discussing Defaulting.
Definition of the Week: SUMMONS A summons is a written letter delivered by the sheriff of the court to let you know that legal action has been taken against you.
The dangers of defaulting on your credit repayments can be severe. If you are in default for more than 20 business days, the credit provider has the right to take legal action against you. This is always a last resort for a credit provider, thus legal action is only taken after you have defaulted and you have not:
  • tried to bring your payments up to date,
  • contacted your credit provider to arrange a new payment,
  • followed the new payment arrangement,
  • responded to a Section 129 letter of demand for at least 10 business days (a Section 129 letter advises you that you are in arrears with your payments), and/or
  • tried to get out of debt, for example by applying for debt review or administration.
If your credit provider decides to take legal action against you, you will receive a summons to appear in court. Knowing Credit: Defaulting [Part 1/4] Dangers of Defaulting If you do not respond to the Section 129 letter, the credit provider may send an agent to you and ask you to sign one of the following:
  • An Acknowledgement of Debt (Section 57 of the Magistrates’ Court Act), where you admit that you owe the money and sign that you promise to pay the amount each month
  • A Consent to Judgement (Section 58 of the Magistrates’ Court Act), where you agree that judgement can immediately made against you, and you agree to pay your judgement debt.
Helpful Hint: Keep track of your accounts, payments, and arrears by getting your full credit report from www.mycreditcheck.co.za. Get monitoring and alerts that notify you when there are any changes on your credit profile. This brings us to the end of our lesson on defaulting. Stay tuned for our next lesson in the Knowing Credit series, where we will learn about summons and judgement!