What rights do I have when my goods are repossessed?

If you fail to make the payments on a credit agreement, the credit provider has the right to cancel the agreement and collect the outstanding amount or to repossess the goods, so they can recoup the outstanding balance. This includes cars, caravans, motorcycles, property and furniture.

The National Credit Act sets out the procedure for repossessions while protecting your rights.

What is the correct process?

By law, a number of events must have occurred prior to repossession:

• You received a Section 129 notice and failed to respond within the required 10 days.
  
  
• A summons was issued and served by the sheriff of the court, which you ignored.
  
  
• A judgment was obtained, and a warrant of execution was issued for the credit provider to repossess the goods.

When the Sheriff arrives to execute the repossession, he must hand you the original warrant of execution. You are not required to sign anything. The goods are then removed.

What are the next steps?

REMEMBER Only a Sheriff of the Court may repossess your goods, not a debt collector or a creditor.

Movable repossessed items, such as a car or furniture, are kept in storage for a few days, giving you time to pay the arrears.

If you can pay all the overdue amounts and associated costs, you can reinstate the credit agreement before the goods are sold. This means you can keep your car or other financed items, with a lesser impact on your credit score.

If the outstanding amount is not settled, the goods should be sold at a public auction. If the credit provider isn’t able to recoup all that you owe them, you will be liable for the shortfall.

This needs to be paid within 10 business days; otherwise, the lender will go to court to recover the shortfall and you will be charged interest.

If the goods sell for more than the outstanding balance, the lender will pay you the difference.

Alternatives to repossession

1. Be proactive. If you think your belongings will be repossessed, do a voluntary surrender. Section 127 of the National Credit Act grants you the right to terminate the credit agreement and surrender the goods. You must notify the creditor in writing of your intention to surrender the car or other items and return it to them within five days. The goods will be sold and the outcome should be less damaging to your credit report than repossession.
   
   You will also save on repossession costs.
   
   
2. Apply for debt review after receiving the Section 129 notice. If you’re under debt review, your car or property can’t be repossessed, and you continue to pay your obligations on your bond or car finance while under debt review.
   
   
3. Consider selling your car or home privately before facing repossession.
   
   
4. See if you can refinance your bond over 30 years to lower your repayments.

What is not allowed?

You can’t be forced into a voluntary surrender of your goods. If a debt collector approaches you with forms to sign that terminate the car finance agreement and give the bank permission to repossess the vehicle, you don’t have to sign them. The bank must follow the proper legal procedure.

If a person arrives to repossess your car and can’t provide you with proof that they are the sheriff of the court, or provide an original warrant of execution stating that the vehicle can be repossessed, you have the right to refuse them entry.

You also don’t have to sign anything or hand over any of your possessions. They are not allowed to use intimidation or threaten you into surrendering the vehicle. If you experience this behaviour, report it to the National Financial Ombud Scheme South Africa (for contact details see Where to complain) and the South African Police Service.