THE CONSEQUENCES OF A DEFAULT JUDGMENT AND ITS RESTRICTIONS

Firstly, one may ask, “What is a Default Judgment (Judgement)?”, how does it effect one and how can it be removed?

I am sure we all have either experienced or have heard the legal phrase “Default Judgement”. A Judgment is an order granted by a Court against a Consumer upon the request of a Credit Provider when a consumer defaults on an instalment or has not paid a debt in terms of a credit agreement.

The first steps taken by a Credit Provider or by his attorney before Judgment is requested, is to send a Section 129 Notice, in terms of the National Credit Act No. 34 of 2005, to the Consumer advising that they are in default of a debt owing in terms of a credit agreement. This notice demands that the debt be rectified or settled to avoid further legal action or alternatively for the Consumer to refer the debt under a credit agreement to a debt counsellor, alternative dispute resolution agent, consumer court or ombud with jurisdiction, with the view of parties resolving any dispute under the agreement or to develop and agree on a plan to bring the payments under the agreement up to date.  A summons is issued in the event the debt is not settled or an arrangement not entered into between the Consumer and Credit Provider. This summons does not necessarily have to be served on the Consumer personally but can be served on their domicilium address (Domicilium citandi et executandi is a Latin legal term meaning the address nominated by a party in a legal contract where legal notices may be sent; the onus usually being upon that party to notify the other signatory of any change in address, especially to be ready to receive any notice that is delivered to that address.).

If the Consumer fails to respond to the summons or fails to appear at the court proceedings, the Judgment is issued or granted in Default. The Judgment is then held or recorded on the system of Credit Bureaus for five years from the date on which it was granted.

The effects of a Judgment been granted against a Consumer!

It is important that a Consumer understands that a judgment on their credit report with the Credit Bureas is an order from the Court stating that the Consumer has to pay the outstanding debt back to the Creditor Provider.  If a Consumer has a judgment against their name, they then can expect their credit rating to decrease, due to the fact that they are considered as a high risk for any future lenders or creditors. Therefore, if a Consumer wishes to apply for a mortgage they will not be granted the loan unless they remove all judgments from your credit report.

How can a Judgement be removed?

Credit Bureaus will not remove a Judgement unless it has been rescinded in either the High Court or Magistrates Court through a rescission application, or the 5 year data retention period has lapsed/expired.

Where the judgment was granted in the High Court, an application to have a High Court Judgement Rescinded (Rescission Application) can generally take place and the High court rules provides that, one needs to prove that judgment was taken / sought or granted in error and/or that you were not in wilful Default of this account.  The fact that the arrears or debt may be paid up/ settled, is a positive contribution to the rescission argument, but is not any basis for bringing the rescission application in the High court.  In the High court, even the consent from a Creditor Provider or their Attorneys to Rescind the Judgment, is not a basis on which the application may be brought but such consent can however be used to positively support the application. The most important issue which needs to be proved is that Judgment was sought or granted against you in ERROR, that there was a payment arrangement in place; and/or that legal notices were not properly received.

The Removal of a Magistrates Court Judgement (Rescission Application) is similar to that of High Court however:

  • The Judgement debt must be settled;
  • The Creditor Provider or their Attorneys have consented to the Rescission Application; and
  • There are sufficient grounds to prove that judgement was erroneously granted or that there are sufficient grounds to make out an argument that you were not in wilful default and/or had no knowledge of the judgement or legal proceedings.

It is therefore of utmost importance that a Consumer does not take any judgements on their credit report lightly. The law states that a judgement on the report should stay there for five years and while that judgement is on their report they can forget about getting any further credit from financial credit institutions!

For more information on this or any other legal related queries please contact us at 033 392 8000

By: Yvonne Clowes – Attorney, Litigation

9 replies
  1. Violet
    Violet says:

    I have a judgement against my name, and i was not aware of until last year when i wanted to buy a car. i have been paying this debt via debit order without fail and was surprised of this judgement. in the period of not paying, i was unemployed. i am currently working and have increased my debit order from R1000 to R3000
    i now see on my report next to my judgement, saying discharge undefined. what can i do to make this go off my credit report?

    Reply
      • Randles
        Randles says:

        Good Day,

        Thank you for your enquiry on our article!

        Please note that our articles are for information purposes only and to do not establish a client relationship nor constitute legal advice.

        In order to ensure that you receive tailored advice in response to your query, please contact us to make an appointment with one of our legal practitioners who will assist further.

        Kind Regards,
        The Randles Team

        Reply
  2. Lebogang
    Lebogang says:

    I have a public school fees judgment issued in August 2014 that i have not been able to settle. Now it is 2019. Does it mean by August 2019 the judgment will be removed automatically since it will be expired or lapsed or do I have to call all credit bureau to remove it?

    Reply
    • Randles
      Randles says:

      Good Day,

      Thank you for your enquiry on our article!

      Please note that our articles are for information purposes only and to do not establish a client relationship nor constitute legal advice.

      In order to ensure that you receive tailored advice in response to your query, please contact us to make an appointment with one of our legal practitioners who will assist further.

      Kind Regards,
      The Randles Team

      Reply
  3. Jonathan
    Jonathan says:

    Hi. My case is the same as that of Lebogang(23.06.2019).My Judgement was issued on 8.9.2014 and will be 5 years on 8.9.2019. Does it fall off automatically on credit bureaus or do I have to contact them.

    Reply
  4. yvonne
    yvonne says:

    On the 12th of December 2018, an interim maintenance order effective from 28 December 2018 was made at the Roodepoort magistrates court against the respondent to pay an amount of R1000-00 monthly and also pay for clothing worth R1800-00 in June and December. Furthermore on the 24th of May 2019 a default judgement was made against the respondent to pay the amount of R2400 monthly and also pay for clothing worth R1800-00 in June and December effective from 30 June 2019.The respondent has failed to make any payments since December 2018 up until October 2019 and also buy the child’s clothing in June 2019.The Total amount owed by the respondent is R19400-00.

    I was given the garnishee order to take to the respondents employer with the police escort in May 2019, but the employer refused to take/sign it stating that the company wants to be served by the sheriff of the court as they do not deal with an individual, I immediately returned to the court to report this at the office and was told to return after 3 months, when I did return on the 12 of September 2019 I was told to write an affidavit explaining all of this and also apply for a garnishee order for all the amount owed by the respondent, to which I did and also told to return after 3-4 weeks to check the status of the order, when I returned on the 17 October 2019, I was told many conflicting things by the officers to which I couldn’t understand, amongst the things I was told is that I cannot be assisted (There is nothing they can do)and that I need to go to the Carletonville magistrates court and pay the sheriffs out of my own pocket to serve the documents to the respondents employer which is in Carletonville as the sheriffs at the Roodeport magistrates court do not go to Carletonville, when I asked to speak to the control prosecutor as I could not understand how nothing can be done to help me with this issue, I was blocked and told that there is nothing that he/she can do about my problem,

    Reply
    • Randles
      Randles says:

      Good Day,

      Thank you for your enquiry on our article!

      Please note that our articles are for information purposes only and to do not establish a client relationship nor constitute legal advice.

      In order to ensure that you receive tailored advice in response to your query, please contact us to make an appointment with one of our legal practitioners who will assist further.

      Kind Regards,
      The Randles Team

      Reply

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