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The Constitutional Court this week handed down a ruling that could have far-reaching implications for indebted consumers whose debts have been excluded from debt counselling after a credit provider has claimed to have issued the consumer with a section 129 notice.
A section 129 notice is a notice of impending legal action. It is sent to you, as a consumer, when you are in default of a credit agreement. It gives you 10 days to bring your payments up to date or to refer the matter to a debt counsellor, an alternative dispute resolution agent, consumer court or an ombud with jurisdiction.
Handing down judgment on the matter of Sebola vs Standard Bank, Justice Edwin Cameron found that credit providers are required to prove that the section 129 notice was delivered to the consumer.
Cameron said the purpose of section 129 is to “give consumers a last chance before court enforcement procedures drop the guillotine on them”.
The Socio-Economic Rights Institute of SA (Seri) acted as a friend of the court to ensure that consumers are properly informed of their rights and given a reasonable opportunity to exercise them.
Osmond Mngomezulu, an attorney at Seri, says that until now it was sufficient for a credit provider to show that it had sent a notice to the consumer’s address. It did not matter if the consumer had received it or not. The ruling allows consumers to contest proceedings on the basis that the notice did not reach them and they were therefore unaware of their rights.
Mngomezulu says although the judgment said nothing about retrospectivity, his reading of it is that it will apply retrospectively, “depending on the merits of each case”.
Credit Ombud Manie van Schalkwyk says his office is seeking counsel to establish if the ruling applies retrospectively.