If you are at risk of losing an asset due to non-payment, you need to ensure you understand the repossession laws in South Africa. Having an asset repossessed is not only embarrassing, it is logistically time-consuming and almost impossible to get the asset back, once the problem has been elevated to this point.
The 2 main assets at risk for repossession due to defaulted payments are your house and your car. The National Credit Act sets out standard conditions for an instalment sale agreement, which applies to both vehicles and property. Essentially, provision of credit is based on the condition that the borrower pays back the capital plus interest. The repossession laws in South Africa are also based on the provision that should a borrower default on his payments, the credit provider is entitled to cancel the agreement and repossess and sell the vehicle or property in order to recover the outstanding balance owed to them. (www.legalcity.net)
In any borrowing situation, it is recommended to approach your bank or credit provider before you know you are going to miss a payment – by pre-empting this you are acting responsibly, and the banks will look favourably on you for this. However, if you wait until the bank contacts you to find out why you have missed a payment, you have already put yourself on shaky ground.
In the case of a house repossession, the bank may offer you a “payment holiday”, so as to allow you to get back on your feet. They may also “be so cooperative to even renegotiate the terms of you contract by either lowering your interest rate or increasing the length of your payment contract.” (www.whatisdebtreview.co.za).
If, however, none of these options are made available to you, you should then apply for a debt review. Do not, however, wait until the bank needs to contact you, in which case they will take legal action in the form of a section 129 letter. From that time, you will then have 10 days to apply for a debt review. If you don’t do this in this time, you will more than likely be summonsed, and the next step from there could be repossession if you can’t provide proof of an alternative plan to repay your monthly debt. (www.whatisdebtreview.co.za).
The actual repossession will then only take place when the bond agreement is cancelled, having been through the process of proving that the borrower can no longer make his monthly payments. The bank will then advise their attorneys to foreclose and attach the property, after which it will be sold. Sale of repossessed properties is most commonly done through auction, and properties are sold “voetstoets”, meaning as they are in that moment. (www.edenvalepropertyforsale.co.za)
The process in vehicle repossession is very similar, with the exception that these cases do not always need to go through a court. Here, a creditor has the right to sue you for deficiency payments. The good news for consumers is that the correct procedures must be followed by the creditor bringing legal action against you, or this could result in an annulment of a deficiency claim. (www.debt.iblog.co.za) This means that as a borrower, you are protected against having an asset seized through dubious or illegal processes.
Repossession laws in South Africa are strictly governed by the National Credit Regulator. The good news is that if you run into financial trouble, there are numerous options available to you should you alert the creditors timeously. Do not avoid the problem if it arises, as sticking your head in the sand when faced with difficult debt payments will only lead to harsh legal action, and could ultimately lead to your asset being repossessed.