If you are NOT under Debt Review:
By law, if you are in default (in arrears) for 10 business days, the credit provider may send you a section 129 letter of demand. Should you not rectify the default within 10 business days or refer the matter to a debt counsellor (if you can’t afford to pay) or the appropriate ombudsman (should you dispute the debt or default), the credit provider would be entitled to issue a summons. Once a summons has been served on you, it becomes a court matter and you either need to defend the action, consent to a judgement or, if you do not respond to the summons, the court may issue what is known as a default judgement. A default judgement simply means that the court didn’t hear both sides of the matter but as you, as the consumer, failed to defend the action, it is assumed that you accept the allegations raised by the credit provider.
If a judgement is granted against you, you are basically being ordered by the court to settle the full outstanding debt immediately. Should you not be able to do so, the court may hold what is called a section 65 hearing to determine your financial situation and/or may make an order to take whatever assets you possess to sell in an attempt to settle the debt. If the sale proceeds of these assets are not enough to settle the debt, you will remain liable for the balance. The court may also issue an emoluments attachment order (EAO), usually (incorrectly) referred to as a garnishee order. An EAO is a court order served on your employed, who is thereby ordered to deduct a set figure from your salary each month until the debt is paid in full.
If you are under Debt Review:
Should you not meet your monthly debt review payments, your credit providers have the right to either exit the review process (if a court order has not yet been granted or the matter has not been enrolled in court) or, if an order has been granted, credit providers are entitled to apply for a judgement which will supersede the debt review court order. Most credit providers do show some good faith leniency where it can be shown that the cause of the missed payments were critical, unforeseeable and unavoidable. They do, however,have the right to refuse to do so. Even where they do make this additional concession, they would expect that the missed payment be rectified.
Debt Review was designed to provide a more consumer-friendly solution to over-indebtedness. It does not, however, seek to unduly benefit the consumer at the expense of the credit provider. As such debt review does not offer payment holidays and should not be abused. By agreement between the National Credit Regulator (NCR) and credit provider associations, consumers under debt review are allowed to pay the debt review fee and legal deposit in the first 2 months of the process, instead of paying your credit agreement obligations but your debt counsellor, credit providers and the courts would take a dim view of a consumer attempting to abuse the process.