A section 129 notice is a formal letter of demand from your creditors. It is the last step before the legal process, in which the creditor will take you to court in order to ensure that you make your payments to them.
On receiving this notice, you should be aware that it is one of your last chances to do something to prevent legal action from your creditors.
The notice is issued in terms of section 129 of the National Credit Act (NCA) and advises a consumer that they are in arrears of a certain amount in unpaid instalment(s) at a given date.
What is the purpose of a Section 129 Notice?
The purpose of the Section 129 notice is two fold.
Firstly, it gives the creditor a way to reacquire funds that they have lent you - should they suspect that you will not be able to pay or do not intend to pay it back. They can also issue you this notice if they believe that you have defaulted on the agreed terms of your credit.
Second, it serves as a formal warning to you -the person who has taken the credit -that if you don’t make payments, legal action will be taken against you. If you receive this notice, you should take it very seriously.
What is the process of being issued with a Section 129 notice?
The credit provider or their attorney may issue notice according to section 129 of the NCA at any time after the client has been in arrears for more than 20 business days.
The credit provider may not proceed with any legal action without having fully complied with NCA requirements as contemplated in section 129 and section 130.
The section 129 notice is your last chance to take action before you are faced with serious legal action from your credit providers.
What will a section 129 notice look like?
A section 129 notice will have to fulfil the general requirements and should possess some key elements. This is the information that you will see on the notice:
- A clear date.
- Your personal details, including your name, ID number, and physical address.
- The specifics of the agreement in which the client is in default of, including the amounts owed and the original terms of the agreement.
- A statement indicating that the letter serves as “notice in terms of section 129”.
- A statement about the client having defaulted.
- The amount of time (usually 10 - 20 days) that you have to remedy the situation before action is taken.
- The actions that will be taken should you continue to default on payment.
- Information regarding steps you can take to remedy the situation and avoid legal action, induction the suggestion that you go under Debt Review and that you should contact a registered debt counsellor.
What makes a section 129 criteria valid?
There are specific criteria outlined in the NCA that deems a 129 notice valid.
These are as follows:
- a) Notification of the consumer’s default should be given to the consumer. It is important and a precondition that the consumer be made aware of his default;
- b) The notification should be in writing;
- c) The notification should comprise a certain format, stating in no uncertain terms what the consumer’s rights and options are;
- d) The notification should disclose the intent on the credit providers front to reconcile and negotiate a plan to help the consumer out of his default,
Section 129(1)(b) adds to the above mentioned criteria by stating that:
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- a) Legal action may not be taken against a consumer in default if the notice as envisaged in section 129(1)(a) has not been delivered;
- b) Legal action may not be taken against a consumer should the requirements as stated in Section 130 not be met
What will happen after a Section 129 Notice has been issued?
If the debtor does not comply with the outlined information in the letter of demand, then a summons will be issued. As a result, the debtor will be required to defend the summons. If they do not or cannot do this, a judgement will be made against them.
What can you do if you are issued with Section 129 Notice?
Seeking a debt management solution such as debt counselling can help you to avoid legal action and will protect your assets from repossession. This is your best option.
The debt counsellor will analyse your debt, negotiate with your creditors on your behalf to get better repayment terms and interest rates, and they will create one restructured payment for you. In the process, they will have made agreements with your creditors to ensure that legal action is not taken against you - as you are working towards a remedy to your overindebtedness.
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What type of response can be given when issued with a Section 129 Notice?
If you are able to make the payments that you have defaulted on, you should communicate that with your creditor as soon as possible so that you don’t take action against you.
Should you be unable to pay, you should communicate that too. Let them know your situation and what steps you are taking to remedy it. If you do make use of a debt counsellor, they will chat to the creditor on your behalf.
The seriousness of the letter of demand
Section 129 notice of the NCA is the last step before legal action and should be taken very seriously to prevent legal action. At this point, you do still have options, so do not hesitate to seek the professional help of a debt counsellor.
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