This article is meant as an overview of the legal process under the National Credit Act No. 34 of 2005. Please consult your attorney to discuss specific aspects of the Act.

Since 01 June 2007, Section 129 of the National Credit Act No. 34 of 2005 (“the Act”) came into effect, requiring a Credit Provider to issue a letter in terms of Section 129, read together with Section 130, to a defaulting consumer under a credit agreement before the credit provider is able to approach a Court to enforce the credit agreement.

The purposes of the S129 Notice is to advise a consumer that he may 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 or develop and agree on a plan to bring the payments under the credit agreement up to date, before the expiry of a period of 10 business days from receiving the letter.

The consumer may also approach the Credit Provider directly to attempt restructuring of the credit agreement in terms of the arrears incurred under the credit agreement.

Should a credit provider institute legal proceeding without first having issued a Section 129 Notice, the legal proceedings may be delayed until such time as the credit provider has complied with this requirement and would necessarily result in some wasted costs.

A Court may also not grant a judgment in an undefended matter where the requirement of the S129 Notice has not been met.

An attorney may attend to the Section 129 Notice on a credit provider’s behalf, having regard that in terms of our law, legal action is typically only regarded as having commenced upon the service of a Summons.

A Credit Provider may further only approach the Court for an order to enforce a credit agreement once a period of 20 business days has elapsed since the consumer defaulted under the credit agreement.

The 10 business day period required in terms of the S129 Notice and the last 10 business days of the aforementioned period may run concurrently.

In the event that a Credit Provider send its own S129 Notice, it is imperative, given the legal requirements for the content of the letter, that the specific legal requirements are met in the letter, failing which it may result in further unnecessary delays once they instruct their attorney to institute legal action.

Having regard that the Act requires the computation of the 10 business day period mentioned in the S129 Notice to be computed from the date that the Notice is delivered to the consumer, the letter should be sent via registered post, alternatively should be hand delivered with the Consumer signing an acknowledgement of receipt, in order to ensure compliance with the delivery requirement as required by the Courts.

The provisions of Section 129 are applicable to all types of Credit Agreements, irrespective of their form and are therefore also applicable to Incidental Credit Agreements*.

There are also various instances in terms of the Act, where the provisions of Section 129 are not applicable before legal action may be instituted by a Creditor, such as in respect of Large credit agreements where the Consumer is a juristic person. Please consult your attorney for specific guidance in this respect.

*(Please refer to the related article in this respect for further explanation with regard to the meaning of an “Incidental Credit Agreement”)

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