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

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