Ideally, we all pay our debts regularly and on time. But if there comes a time when you just can’t, it helps to know what creditors can and cannot do to recover the debt.

Most credit agreements in South Africa are subject to the National Credit Act, which outlines exactly what your creditors can do to enforce payment. We take a look at the most important of these actions, as well as what your creditors cannot do when you can’t pay. Remember, too, that working with your creditors, and if necessary, choosing a solution like debt review, is the best way to prevent harsh action being taken against you.

What creditors can do when you cannot pay

Suspend a credit facility
This applies to facilities such as credit cards. If you don’t pay on time, your credit can be suspended, which means you cannot use your credit card.

Request goods be returned in the case of an instalment sale (HP agreement)
If you bought an item such as a washing machine on an HP agreement and are in default on the payments, your creditors can ask you to return the item. They can then sell this at a fair market price to offset your debt.

Contact you in writing and propose a way forward
Your creditors must send you a written notice saying you are in default and offer options like setting up a payment plan, for instance extending the term of a loan or reducing the instalment amount, so that you can get your payments up to date. These options should include a referral to a debt counsellor, as you may qualify for debt review. Creditors must follow this step if they want to take any further action, such as obtaining a judgement.

Top tip: Never ignore these letters. Always respond to your creditors and let them know what your situation is – you may be able to come up with a plan.

Approach a court for a judgement if you have not responded to written notices or summons
If you have been in default for longer than 20 business days, and have not responded to a written notice or summons from the creditor within 10 business days, your creditors can approach the court for an order to enforce the credit agreement in a judgement. A judgement will state that you have not paid your debt and it will reflect on your credit record for 5 years.

Approach a court for a warrant of execution to attach goods
When a judgement is granted, a creditor can apply for a warrant where the sheriff can attach goods such as your furniture and sell these to pay your debt.

A judgement can be granted only after your creditors take certain steps including writing to you advising that you are in default and offering solutions, issuing a summons if you cannot find a solution or don’t respond, and approaching the court for a judgement that will allow them to enforce the debt. When a judgement is granted, a creditor can apply for a warrant of execution.

Apply for an Emoluments Attachment Order (EAO), also known as a garnishee order
This is where a creditor requests your employer to deduct money from your salary and pay it over. You have to agree to a garnishee order – other than in the case of maintenance, money cannot simply be deducted from your salary to pay a debt, without your consent.

What your creditors cannot do

Act against you when you are in debt review
Creditors cannot apply for court orders and judgements if the credit agreement is part of the debt review process, also known as debt counselling, or if you have agreed to a payment plan to bring the account up to date and are sticking to the payment plan.

Sell repossessed goods at discounted values
Creditors are required to sell repossessed goods at fair market value.

Apply for a court judgement in an area far away from you
Your creditors cannot apply for judgements or attachment orders in courts far away from you. The matter must be in a court in the area in which you live or are employed so that you can attend.

Keep your personal documents
This includes ID documents, ATM cards, debit and credit cards and PIN numbers.

Send debt collectors after hours
Debt collectors cannot harass you and can only visit you between the hours of 6am and 9pm Mondays to Saturdays.

Don’t run away from bad debts

Not being able to pay your debts is stressful. However, money worries don’t go away if we ignore them, they usually get worse. So, talk to your creditors if you cannot pay and see if you can come up with an alternative arrangement. You can also contact the National Credit Regulator for more information or the Credit Ombud if you have a dispute with a credit provider.

Actions creditors can - and can't - take against you