The National Credit Act (“NCA”) requires that a notice is given to a debtor who is in arrears before legal proceeding in a Court can lawfully be instituted against the debtor (e.g. a Summons).  The content of the notice, which is intended to be a written letter, is set out in Section 129 of the NCA.

The purpose of the notice is to advise a consumer of his/her rights in law and, specifically, in terms of the NCA and in respect of outstanding and overdue debts.

The notice is required for debts in respect of Credit Agreements, so, for this article, we will refer to creditors as “credit providers” and debtors as “customers”.

Content required for a valid Section 129 Notice

The notice will normally take the form of a “Letter of Demand” which should contain the following information:

• Clearly indicate that the letter serves as “notice in terms of Section 129”.
• State that the customer is in default of the agreement between the parties.
• The amount of the arrears.
• That the account has been in arrears for more than 20 days.
• The source of the indebtedness (e.g. account details and type of account).
• That the customer may refer their indebtedness to one or more of the following institutions:
  • A Debt Counsellor.
  • An alternative dispute resolution agent.
  • The consumer court.
  • An ombudsman with jurisdiction over the industry in question (i.e. banking insurances, etc.)
  • That the customer may contact the credit provider (or their legal representative) to conclude an agreement acceptable to the creditor provider in respect of the debt.
• The customer has 10 days to act.

The 10 days will afford the customer time to consider his/her options which may include obtaining legal advice, settling the arrears, referring the matter to one of the above-mentioned institutions.

Instituting Legal Proceeding

A credit provider may not institute legal proceeding if it has not issued the notice or if the 10 days has not expired; this includes applications to Court where Consent to Judgement has been given by the customer in terms of an agreement.

“Delivery” of a Section 129 Notice

A credit provider is required to “deliver” the notice to the customer.  Normally, the address for delivery will be chosen by the customer in the credit agreement. Most credit providers will use registered post.

The issue of “delivery”, in particular, by registered post, has been adjudicated several times with some conflicting judgements; recent case law (Kubyana v Standard Bank of South Africa Ltd – 2014) has confirmed the following:

• The notice must be given to the correct branch of the Post Office for delivery to the customer’s address.
• The Post Office must send a notification to the customer to collect the section 129 notice.

To effect “delivery” of such notice, the credit provider must take all steps necessary that would bring the notice to the attention of a “reasonable consumer”.

Even if the customer does not collect the notice, in most instances, a credit provider will have discharged its obligations in terms of the NCA; further, it was determined that the NCA does not allow consumers to frustrate the delivery of section 129 notices by ignoring notifications sent to them by the Post Office.

Of course, there are instances where the credit provider has followed the necessary steps but a “reasonable customer” would still not be aware of the section 129 notice; in such cases, provided the customer can supply evidence to this effect, legal proceeding may be considered premature.

To avoid, the need for costly legal attendances it is recommended that you collect any registered mail from the post office.

Conclusion

A Section 129 Notice is the first step in the legal process and should be taken seriously by consumers to prevent further legal action.  The purpose is to make the customer aware of the fact that they are in default; to make arrangements regarding their finances; and, if possible, avoid Legal proceeding.

DISCLAIMER: THERE ARE MORE CONSIDERATIONS THAN WE CAN COVER IN THIS ARTICLE SO ONLY USE THIS INFORMATION AS A GUIDE.   THIS INFORMATION DOES NOT CONSTITUTE LEGAL ADVICE.  IT IS ALWAYS BEST TO DISCUSS YOUR SITUATION WITH AN ATTORNEY; CONTACT US AT 0861 88 88 35; helpdesk@gcm-legal.com AND THROUGH THE CONTACT FORM ON THIS PAGE.