Never ignore a letter of demand or S129 notice issued in terms of the National Credit Act. This letter, issued by or on behalf of a creditor, notifies you that you’re in arrears in terms of your credit agreement with a creditor.
Legal action can be taken 20 business days from the date that your repayment was due, and 10 business days from the date that the S129 notice was delivered. If you ignore it, your creditor is within its rights to proceed with legal action.
A letter of demand or S129 notice is issued in terms of the National Credit Act which regulates most credit agreements. Read more: What is credit?
The notice must contain certain information – including:
“Delivery” of this notice can be by registered mail or via registered email or registered SMS.
What can you do if you receive a letter of demand?
Crucially, a S129 notice must spell out for you that these are your options:
Once you have referred your account to a debt counsellor, alternate dispute resolution agent, consumer court or ombud, your credit provider may not proceed with legal action against you.
Should you apply to be placed under debt review, your debt counsellor will have at least 60 days within which to come to an agreement with your credit provider, alternatively to refer the matter to a Magistrate’s Court.
Should this not happen, the credit provider may give notice to terminate the debt review and resume the legal process against you. This will only add to your debt load because most legal fees incurred by your creditor will ultimately be passed on to you.
If you opt to refer your accounts to any of these entities, it’s advisable to notify your creditors. This is particularly important when you exercise your right to refer your accounts to a debt counsellor so as to avoid a creditor issuing summons because they were unaware that you have gone under debt review.
Don’t ignore a section 129 notice
If you ignore the S129 notice, a legal process will unfold. Usually, your account will be “handed over” either to a debt collector or to attorneys who specialise in debt collection. This may or may not start with you being asked to sign an acknowledgment of debt, which sets out when you will make payment.
Most credit providers, however, will immediately issue a summons to commence the legal process.
Summons is served by the sheriff of the court and gives you 10 business days to state whether or not you plan to defend the matter. If you don’t serve a notice of intention to defend, your creditor will apply to court for default judgment to be granted against you.
Avoid a default judgment
You want to avoid default judgment because it will remain enforceable for 30 years, meaning your creditor has 30 years from the date of the last payment made to collect that debt. Furthermore, it will be noted on your credit report until your debt is paid in full or a rescission is granted by the court.
If your repayments are in arrears but you make a plan to pay what you owe before judgment is obtained, this will be noted on your credit report for one year.
Once default judgment has been granted against you, your creditor may have a warrant of execution issued which entitles the sheriff of the court to attach any movable or immovable assets you have to be auctioned to settle your debt.
This is probably the worst thing that can happen to you if you’re a homeowner and your debt is a mortgage or home loan. Additionally, your assets will likely not fetch market value when auctioned off by a creditor’s agent.
This is why it is crucial to immediately assess your position when you receive a S129 notice and decide on a course of action that is right for you.
