Firms must inform creditors by post

Consumers will have the right to challenge debt judgements made against them by organisations if there is no proof that they had been informed of a default, the Constitutional Court ruled yesterday.  Before the ruling, it was enough that firms to show that they had sent default notices to chosen addresses before starting recovery proceedings under the National Credit Act.


The Banking Association of South Africa welcomed the decision. “We are pleased with the judgement. It is a win-win. Under the ruling, companies will have to prove the despatch of the registered letter and prove that it went to the right post office,” said Nicky Lala Mohan general manager: legislation and regulatory oversight of the Banking Association of South Africa. Mohan added that he was pleased the court did not go to the extreme of ordering personal service of notice to debtors.


But the ruling doesn’t leave consumers off the hook. “If for some reason a consumer says they did not receive a notice the court will conduct an investigation into the matter. It [the Court] will adjourn the matter but not dismiss the case and will direct the course of action,” explained Mohan.


Luke Hirst, managing director at debt management service provider DebtBusters, added: “The ruling makes sense and evens up what the credit provider and consumer need to do. But consumers still need to pay serious attention to such notices because if they don’t there could be additional expenses or the possibility of them losing secure assets such as their home or car and getting a negative credit score.”