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The one letter from a creditor that you should never ignore

Final demand to make deal before legal action

When you’re battling to pay your bills, it’s tempting to leave your mail unopened.

A section 129 notice gives you a last chance to make payment arrangements. Picture: 123RF/ANDRIY POPOV
A section 129 notice gives you a last chance to make payment arrangements. Picture: 123RF/ANDRIY POPOV

When you’re battling to pay your bills, it’s tempting to leave your mail unopened. This is as irrational as sticking your head in the sand, pretending your debts don’t exist. But when you resurface, they are right where you left them – except things just got a lot worse if the mail you have ignored was a section 129 notice. 

If there’s a notice you should never ignore, it’s this one. Named after a section of the National Credit Act, a section 129 notice is a letter issued by a credit provider when you are at least 20 days behind on your payments.

It’s a notice of “impending” legal action, which means that legal action will be taken against you if you don’t act on the notice. The purpose of the letter is to draw to your attention to the fact that you are in default and to offer you specific remedies.

The notice gives you three options. You must:

  1. Bring your payments up to date; or
  2. Engage a debt counsellor; or
  3. If you’ve stopped paying due to a dispute with your creditor, refer the matter to an alternative dispute resolution agent, consumer court or an ombud with jurisdiction.

You have only 10 days, from the date of delivery, to act on the notice. If you fail to do so, your creditor may hand over your account to a debt collector, which will result in you paying debt collection fees on top of everything else that you owe. 

Or your creditor may apply to the courts for a default judgment against you, which will be noted on your credit report for five years and have a negative impact on your chances of obtaining more credit, or getting credit at a good rate.

Your credit provider must be able to prove that a section 129 notice was delivered to you. This is in terms of a 2012 landmark judgment handed down by the Constitutional Court, which states that the purpose of the notice is to give you “a last chance before court enforcement procedures drop the guillotine” on you.

Before this judgment, it was enough for a credit provider to show it had sent a notice to your address. But since the judgment, if you never received the notice, you can contest legal action on the basis that the notice didn’t reach you and you were therefore unaware of your rights.

A section 129 notice must also be dated and refer to the agreement which you are in default of and the default amount. 

Your creditors can show they complied with section 129 of the NCA by proving that the notice was sent by registered mail, reached the correct post office, and can produce the track and trace report from the post office or proof of actual delivery.

So, don’t try to escape your legal responsibility if you’ve received the notice. Act on it.

Debt counsellors say that consumers tend to wait too long before exercising their rights – as set out in the notice – and when the sheriff comes knocking, they want a magical solution. But there are none. 

Consumers who don’t show good faith have little to no chance of getting bad debts included in debt review. 

“When you enter into a credit agreement, the consequences of not making regular payments are explained to you. The fact that credit providers are required in terms of the law to notify you of possible options before taking legal action against you gives you another chance to fix the problem. So there’s no excuse for not doing so,” says debt counsellor Renee Marais. 

If you’ve received a section 129 notice, it’s not too late to ask your creditors to consider a restructuring of your debt – in other words, a reduced instalment over a longer term. 

Kuben Gounden, the chief executive of retail collections at First National Bank, says the bank encourages any customer who has missed a monthly payment or received a section 129 notice to contact the bank to make an arrangement or to consider other viable options.

“The bank is willing to engage with you to agree on a reasonable repayment arrangement to help bring the payments under the credit agreement up to date.”