Debt collection law

Hard Collections (legal):

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  There is no obligation on a creditor to first attempt to obtain a repayment arrangements and payment via the Soft Collection process, the creditor may wish to proceed with
  
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  Hard/Legal Collections immediately.
  
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  Most creditors have their own internal debt collection departments and send out Letters of Demand prior to handing over accounts to attorneys or debt collectors. These creditors as a result attempt to make repayment arrangements etc prior to handing over the account for collection to attorneys or debt collectors. In some instances their attempts are unsuccessful and as a result require the more formal Hard/Legal Collections process to be followed to collect the outstanding debt and as a result hand the account over to attorneys or debt collectors.
  
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  Upon handover most attorneys and debt collectors proceed to send out Letters of Demand and in terms of credit agreements also a Notice in terms of the NCA. The debtor may bring the arrears up to date, make a repayment arrangements or refer the credit agreement to a debt counsellor, alternative dispute resolution agent, consumer court or ombud with jurisdiction with the intent that the parties resolve any dispute under the agreement within the notice period set out in the Letter of Demand and/or the Notice in terms of the NCA.
  
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  The creditor may issue a summons for the full outstanding debt. In the event in which the debtor fails to serve and file a Notice of Intention to Defend within the notice period the creditor may proceed to apply for Default Judgment. Should default judgment be obtained the creditor may proceed to execute the judgment by applying to court for the issue of a Warrant of Execution against the debtor’s movable property. The Sheriff of the Court will be instructed to execute the Warrant of Execution and may attach and sell the debtor’s goods on auction in order to obtain money to pay the creditor in order to satisfy the judgment debt and the debtor may also be subpoenaed to appear in court in terms of section 65A of the Magistrate’s Court Act, 32 of 1944 (‘MCA’) for a financial enquiry.
  
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  In the event in which the debtor wishes to make repayment arrangements upon receipt of the Letter of Demand or a Summons the debtor may admit liability in terms of the debt and undertake to pay the debt, interest, legal costs, -disbursements and collection commission in instalments in terms of section 57 of the MCA until such time as the debt is paid in full. Further agree that in the event in which the debtor defaults in terms of the offer to pay back the debt in instalments that the creditor shall be entitled to apply for judgment for the amount of the outstanding balance of the debt for which the admitted liability together with interest, legal costs, -disbursements, collection commission to be paid in instalments in accordance to the debtor’s offer until such time as the judgment debt is paid in full. This judgment will have the same effect of a judgment by default as mentioned above.
  
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  In the event in which the debtor wishes to consent in writing to judgment, upon receipt of a Letter of Demand or a Summons, in favour of the creditor for the debt, interest, legal costs, -disbursements, and collection commission for payments of same in instalments in terms of section 58 of the MCA the creditor may immediately proceed to apply for the judgment for the amount of the outstanding balance of the debt for which the admitted liability together with interest, legal- costs, -disbursements, collection commission to be paid in instalments in accordance to the debtor’s offer until such time as the judgment debt is paid in full.
  
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  A debtor may also consent to an emoluments attachment order, whereby his employer is ordered by the court to deduct monthly instalments from his salary and pay such over to the creditor, based on any of the judgments obtained above.
  
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  If a debtor decided to defend the claims as indicated in the summons and serves and file a Notice of Intention to Defend the matter will be adjudicated in the ordinary course of culminating in a judgment that is either in favour of or against the debtor. If such a judgment is granted against the debtor the abovementioned Warrant of Execution process will be followed and the debtor may also be subpoenaed to appear in court. If the debtor fails to appear in court after receiving personal service of the notice to appear in court a warrant for the debtor’s arrest may be issued by the court.