The costs of ignoring Section 129 letters add up

Don’t Ignore Section 129 Letters – The Hidden Costs Could Cripple You

The National Debt Mediation Association (NDMA) says it is concerned that consumers are not aware of the costs of legal action should they delay seeking assistance when they start experiencing difficulties with meeting their monthly debt obligations.

When a Creditor is about to take legal action against a consumer they will send what is called a Section 129 Letter

An analysis of complaints received by the NDMA shows that consumers are still not approaching their credit providers the moment they start experiencing payment difficulties with the consequence that by the time they seek help their case is already in the legal process or a court order is in place. This makes the case difficult and expensive to resolve.

The Section 129 letter urges consumers to head to a debt counsellor to get help as soon as possible.

For the year ending December 2011 in more than 50% of cases that the NDMA received requests for help or complaints dealt with when a credit provider was in the process of executing a court order against a consumer.

Depending on who manages the collection process legal costs incurred can include collection commission interest on outstanding costs, sheriff expenses and correspondence expenses.

“By not acting quickly enough it can cost thousands of rand which the consumer could have used towards settling outstanding debt” says CEO of the NDMA Magauta Mphahlele.

In one case a consumer who owed R5443 in capital and interest ended up with a salary attachment order of R12409. This included R6976 in legal fees that went to the collecting attorneys.

This included 10% collection commission at R1 104

Costs of R3166

R2795 interest on outstanding costs

and R598 for VAT.

It is unclear if this exceeds the Section 103(5) induplum limit or not

Consumers can avoid such costs if they seek assistance early. She explains that this trend draws attention to the possibility that the average South African consumer is either ignorant of their rights and responsibilities or does not trust what action the credit provider will take once they approach them for assistance.” Consumers are urged to take advantage of the avenues available to seek advice and assistance” adds Mphahlele. She says that many consumers take action a day or two before their houses or vehicles are auctioned or repossessed which is often too late.

With credit agreements that are regulated by the National Credit Act (NCA) the legal process commences with a section 129 notice that credit providers are obliged to issue to a consumer once they are in default for at least 20 business days. If 10 business days elapse without the consumer responding to the credit provider the credit provider is at liberty to take legal action.

“While the section 129 notice might seem like an intimidating document for many consumers it is not necessarily the end of the world if the consumer takes action in respect of the options provided in the letter” says Mphahlele. Once a consumer has received a section 129 letter they have the option to refer that specific credit agreement to a debt counsellor an alternative dispute resolution agent consumer court or Ombud with jurisdiction. The intention is that the credit provider and the consumer resolve any dispute related to the agreement or to bring the payments up to date. This will allow the account to be included into a debt review.

She urges consumers to inform their credit providers as soon as they experience or anticipate that they will experience payment difficulties. Where a section 129 letter has been issued consumers are urged to respond to the letter by contacting the credit provider and informing them how they intend to remedy the default or take any other relevant actions. If they are under debt counsellingdebt counselling they should consult their debt counsellor. If after approaching the credit provider a consumer is unhappy with the response Mphahlele urges them to contact the NDMA for assistance.

Ignoring Section 129 letters can lead to significant financial consequences, including costly legal fees and increased debt. At Zero Debt, we understand the urgency of addressing debt issues early to avoid such burdens. Our team of certified debt counsellors is here to provide the support and guidance you need. Don’t wait until it’s too late—take the first step towards financial stability today. Call us at 086 111 3749 or visit our contact page to speak with a counsellor. If you’re pressed for time, simply request a Free Call Back, and one of our counsellors will reach out to you promptly. Act now to secure your financial future.

FAQs and Answers

1. What is a Section 129 letter?
   A Section 129 letter is a formal notice from a credit provider warning a consumer that legal action may follow if debt is not addressed promptly.

2. When is a Section 129 letter issued?
   It is issued after a consumer has been in default for at least 20 business days without making payment or contacting the creditor.

3. What costs can arise from ignoring Section 129 letters?
   Ignoring the letter can result in additional charges like legal fees, collection commissions, interest on costs, and sheriff expenses.

4. Can I still get help after receiving a Section 129 notice?
   Yes. You can consult a debt counsellor, dispute resolution agent, consumer court, or Ombud before legal action proceeds.

5. How quickly should I respond to a Section 129 notice?
   Consumers have 10 business days to respond before creditors may take legal action. Responding early can prevent costly consequences.

6. Will I lose my assets if I delay action on my debt?
   Delays can result in court orders, auctions, or repossessions. Early intervention may protect your home or vehicle from being seized.

7. Can legal fees exceed the original debt amount?
   Yes. Legal costs can sometimes more than double the original debt if not addressed early, especially once garnishee orders are involved.

8. What should I do immediately after receiving the letter?
   Contact your creditor or debt counsellor immediately to discuss repayment plans or include the account in debt review if eligible.