What happens if you cannot pay your debt in South Africa?
What happens if you can't pay your debt in South Africa? Not paying your debt in South Africa can lead to additional fees and possible legal action. Depending on the case, the court order could deduct money directly from your income or seize your vehicle, property, or assets.
The debt is regarded as a separate account once it is in the possession of a collection agency. If you don't pay, the collection agency may file a lawsuit. Depending on how the case turns out, the court may seize your property or garnish your income to recover the money you owe.
For personal loans, credit cards, retail accounts, and vehicle loans, the timeframe is three years. Therefore, debt older than 5 years in South Africa is, most of the time, no longer collectable.
As long as the debt you owe remains, you will be liable in South Africa. As such, it is always in your best interest to pay your debts before leaving the country or be open with your creditors about why you're moving abroad and how you plan to settle your debt from abroad.
In South Africa, there isn't a legal provision that allows for the outright “writing off” of debt in the sense that it can be completely eradicated without payment or settlement. However, there are circ*mstances in which your debt can be dismissed.
South Africa has different laws which specify prescription periods, for example, the Prescription Act says that contractual and delictual debts extinguish after three years from the date when it became payable (due). Prescription periods may, in certain circ*mstances, be delayed or interrupted.
A debt becomes prescribed after three years (or the applicable time period, depending on your loan type) if a creditor does not request payment from you, contact you regarding legal action against you, start legal proceedings against you, or otherwise establish contact with you.
Now to two questions that can cause a lot of anxiety: “Can Debt Collectors Take You To Court In South Africa?” And “Can I go to jail for unpaid debts in South Africa?” The reality is that you cannot be imprisoned simply for owing money. There are, however, legal nuances and exceptions that are important to understand.
If initial contact fails to resolve the debt issue, debt collectors may resort to legal actions. This can include obtaining a court order, which allows them to take further steps to recover the debt. Debtors should be aware of their rights and seek legal advice if necessary.
Your debts don't disappear and you still have an obligation to repay them. However, if your move abroad is genuine, just make sure to be communicative with your credit card issuer and/or debt collectors.
Is South Africa in a debt trap?
More and more South Africans are feeling the pressures of credit, with escalating fiscal pressure making it difficult for many to keep on top of payments. This is seen by debt for South Africans currently sitting in R2. 31 trillion, with R142.
As a rule of thumb, a debt-to-income ratio of 36% is considered high. While a ratio of 43% is considered too much debt. Here are a few tell-tale signs that your debts have risen beyond your control: At least half of your income is spent on consumer debt (credit cards, medical bills, personal loans).
The only time you can go to jail for unpaid debt is under the following circ*mstances: If you fail to pay child maintenance. You do not pay your SARS tax bill. You fail to appear in court after being issued with a summons.
A debt collector is not allowed to:
Serve any false legal documents. Present themselves as police officers, sheriffs or officers of the court. Spread, or threaten to spread, any false information about your creditworthiness. Charge more than the fees set down by the Council.
The Amendment Act will provide additional protection to low-income consumers from over-indebtedness by either re-arranging, suspending or extinguishing (partially or wholly) their unsecured credit debts during a period of four years from the commencement date, which can be extended.
The debt will likely fall off of your credit report after seven years. In some states, the statute of limitations could last longer, so make a note of the start date as soon as you can.
Defend the matter – Regardless of whether you agree with the outstanding balance / account or not. If you feel that the Summons is incorrect or that you do not owe the money, dispute it, using the correct legal process to do so. This will be done by your legal team.
“It could affect employment, housing and more.” Avoiding payment also means that creditors can sue you for unpaid bills. In some states, you could get your wages garnished or have your assets seized. You're still paying your outstanding debt even if you aren't making the payments directly.
Most negative items should automatically fall off your credit reports seven years from the date of your first missed payment, at which point your credit score may start rising. But if you are otherwise using credit responsibly, your score may rebound to its starting point within three months to six years.
A judgment is public information and remains on your credit report for 5 years or until the judgment is rescinded by a court or paid in full. Once paid Consumers no longer have to get the judgment rescinded in court. What is a rescinded judgment?
What happens to your debt after 10 years of not paying it?
Can a Debt Collector Collect After 10 Years? In most cases, the statute of limitations for a debt will have passed after 10 years. This means a debt collector may still attempt to pursue it (and you technically do still owe it), but they can't typically take legal action against you.
If someone owes you money and they refuse to pay you at the agreed time, you may take the matter to the Small Claims Court. If someone has bought goods such as furniture from you and they have failed to pay for it, you can take the matter to the Small Claims Court.
In short, and if the NCA applies to your credit agreement, a bank is not allowed to apply the common law set-off without your consent. Banks and other credit-lenders must ask you before taking money from one account to cover your debts in another.
If the judgment debtor doesn't pay and you want to enforce, the Magistrate's Court procedure will apply. The clerk may issue a warrant and the sheriff of the court may execute. Consult your attorney on enforcing the judgment in the Magistrate's Court.
The statutory in duplum rule limits all interest and other payments on debt to double the amount of the original debt. So in the above example, if you paid R400 you would only owe R3 600 (R2 000 for the amount borrowed and R1 600 interest). The interest would not accumulate to R2 000 again.
