
Debt Review/Counselling Vs Debt Mediation
February 12, 2024
The Law of Fate
April 3, 2024Introduction:
The National Credit Act 34 of 2005 is a crucial piece of legislation in South Africa designed to regulate and promote responsible lending practices. Section 129 of the Act plays a pivotal role in protecting the rights of consumers when facing financial difficulties. This article aims to shed light on Section 129 and provide guidance on what consumers should do when they receive notices under this section, including seeking professional advice from debt counsellors.
Understanding Section 129:
Section 129 of the National Credit Act outlines the procedure that credit providers must follow when a consumer defaults on their credit agreement. The primary objective is to ensure that consumers are informed about their arrears and are allowed to rectify the situation before legal action is taken.
Key provisions of Section 129 include:
- Issuance of Notice:
- When a consumer falls behind on payments, the credit provider must issue a written notice informing the consumer of the default and providing details of the outstanding amount.
- The notice must also include information about the consumer’s rights and options to remedy the default.
- Options for the Consumer:
- Upon receiving the Section 129 notice, consumers have the right to either:
- Remedy the default by making the outstanding payments within a specific timeframe.
- Make alternative payment arrangements with the credit provider, subject to negotiation.
- Upon receiving the Section 129 notice, consumers have the right to either:
- Good Faith Engagement:
- Both the credit provider and the consumer are expected to engage in the process in good faith. This means that the credit provider should be open to reasonable proposals from the consumer, and the consumer should genuinely attempt to address the arrears.
- Timely Action:
- Consumers mustn’t delay addressing a Section 129 letter, as they have only 10 business days from receiving the letter to respond. One of the biggest mistakes consumers make is waiting too long to attend to the matter.
What to Do When You Receive a Section 129 Notice:
- Review the Notice:
- Carefully go through the Section 129 notice to understand the details of the default, the outstanding amount, and the proposed course of action.
- Assess Your Financial Situation:
- Evaluate your financial situation to determine the feasibility of either settling the arrears or proposing alternative payment arrangements.
- Communicate with the Credit Provider:
- Contact the credit provider promptly to discuss your options. Be prepared to provide a clear and honest overview of your financial circumstances.
- Negotiate in Good Faith:
- Work towards a mutually beneficial agreement with the credit provider. This may involve restructuring the repayment plan or finding alternative solutions that suit both parties.
- Seek Professional Advice – Debt Counselling:
- If you find it challenging to negotiate with the credit provider or are unsure about your rights, consider seeking assistance from a debt counsellor.
- Debt counsellors can assist with restructuring the arrears on this account and also help manage other accounts you might have, providing a comprehensive approach to your financial situation.
- Legal Protection:
- Engaging a debt counsellor provides legal protection, as creditors are legally required to cease legal proceedings once the debt review process is initiated.
Conclusion:
Section 129 of the National Credit Act 34 of 2005 is a consumer protection measure aimed at fostering fair and transparent practices in the credit industry. As a consumer, it is essential to be aware of your rights and take proactive steps to address any defaults. Open communication, negotiation in good faith, and seeking professional advice, especially through debt counselling, are key elements in navigating the Section 129 process successfully. Remember, timely action is crucial to avoid potential legal consequences.
Author: Casper le Grange ( Director and Debt Counsellor of Debt Counselling Group SA)