Finances are tight and debts are increasing now you face the threat of vehicle repossession. Vehicle repossession can happen when you are still paying off your vehicle but cannot come up with the money you owe to the bank or loan company. The bank might then follow a legal process to take the vehicle back from you to cover their costs. Bear in mind that you as the debtor have rights according to the laws of South Africa.
According to the National Credit Act, any creditor can send you a Section 129 letter of demand if your account is in arrears for 20 days or more. Creditors are allowed to proceed with the collection process after one missed payment. The process that needs to be followed when a vehicle is repossessed is in terms of the Section 123 letter of demand. Should you not respond to the letter of demand, the creditor may proceed to institute further legal action commencing with a summons whereafter the court will issue a warrant of execution authorizing the repossession of your vehicle. After the vehicle has been repossessed the bank will send the vehicle to an auctioneer. The auctioneer will be authorized to sell the vehicle on behalf of the bank. However, the auctioneer must store the vehicle for a period of ten days, to give you a chance to gather the arrear funds or conclude a repayment arrangement with the bank. If you fail to do so the vehicle will be sold. Please note that often vehicles sold on auctions get sold for less than the amount that you owe to the bank and once the vehicle is sold you will still be held liable to settle the shortfall amount.
The process for repossession of a vehicle is very complex, you need to be careful if a debt collector or representative from the bank comes to you requesting for you to sign forms that allow them to take possession of the vehicle. This is not a legal process, and should you sign, you will consent to the voluntary surrender of the vehicle which you do not have to agree to. Vehicle repossession can only take place via an official and original court order, named a warrant of execution. You would also first have had to have been served with a legal document called a summons which gives you a chance to defend yourself. These documents would have been delivered to you by a sheriff of the court.
If you know you are facing financial trouble and you are not able to make a payment on your monthly vehicle instalment you have the option to contact the bank and inform them. The bank will try and assist you by, for example, adjusting your monthly instalment or extending your repayment period.
Make sure that the terms of the agreement are in writing and contact us to assist you with ensuring that you reach a mutually beneficial agreement that will prevent you from defaulting on future payments.
Charne Sebonka
charne@bbplaw.attorney
Associate
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