Collecting Debt – A brief overview of your legal remedies

You have just finished your master piece, by tiling Joe Soap’s floor in his house, but despite your glorious masterpiece he does not pay? His excuses are drying up and apparently his money too, not even to mention your patience.

The question begs, what are you to do when someone is not paying your account for your services rendered and your own attempts have been unsuccessful? Normally when the amount/s due to you are relatively high, and in instances where you are working with a rebellious payer, you would be best advised to acquire the assistance of a professional debt collector. The National Debt Collection Act 114 of 1998 specifically stipulates that any attorney, or his or her agent, or a registered debt collector may act as a debt collector and can only collect the capital amount plus lawful interest and the debt collector’s fee.

A debt collector, not being an attorney, will always try and consult with a debtor to negotiate what the overdue amount is and when such amount should be paid. The purpose of acquiring the assistance of a debt collector would be to save costs, by not entering into timeous litigation, and have the matter resolved as soon as possible.

However, as history dictates, this is not always the case and the debt collector may then need to explore some more drastic measures in his/her attempt to collect the overdue amount. These drastic measures should only be taken as a last resort when the debt collector has exhausted all reasonable attempts to recover the overdue balance as these measures entail an attorney to enter into litigation proceedings to obtain judgment against the debtor.

Brief overview of the process prior to obtaining judgment against the debtor

When the attorney chooses to enter into litigation proceedings it can go one of two ways:

  1. The Debtor may choose to defend the action;
  2. or he may choose not to defend the action.

The Litigation process, when defended, may become complicated and thus for purposes of this article we will only be focusing on the process one would normally follow when the debtor has chosen not to defend the action.

1.) Letter of Demand – It is advisable that a letter of demand be sent to a debtor, demanding from him/her payment within 7days of receipt thereof. Should the Debtor chose not to respond to the demand, summons will be issued against him.

2.) Summons – This is a legal document that so to speak contains the facts and merits of your case. Summons will be drafted and issued out of the court where the Debtor resides, carries on business, is employed or where the cause of action arose. After the summons have correctly been issued it will be sent to the sheriff for service thereof on the Debtor. The Debtor will subsequent to receiving the summons have ten days in which he/she has to defend the matter.

3.) Default Judgment – In the event of the Debtor failing to defend the matter within the prescribed ten day period, the Creditor will then have the right to apply for default judgment against the Debtor.

Once Judgment has been obtained the judgment is valid for thirty years and as a result allows the creditor to explore all legal avenues to recover his or her judgment debt within the thirty years. Obtaining a judgment also means that the said judgment will reflect on the credit bureau’s database, which is not something that any person would want on their name when applying for credit of any sorts.

It is a common perception amongst the public that once judgment has been obtained the debtor will automatically the next morning pay the debt into the creditor’s bank account. As history has it, this is not always the case. We therefore explain the procedures hereunder when the debtor despite having judgment obtained against him still refuses to settle his debts:

The following are the legal avenues in which a creditor who obtained judgment can recover his/her debt from the debtor:

1.)    Warrant/writ of execution –

This procedure is most probably the most well-known procedure to the layman. This procedure entails the attachment and execution of the debtor’s property. It is settled law that the creditor must first seek to attach the debtor’s movable property before attaching his immovable property. In practice it often happens that the debtor does not have sufficient movable or immovable property to satisfy the judgment debt or that the property in the possession of the debtor is not his/her, thus forcing the creditor to explore his other remedies to recover the full debt.

2.)    Sec 65 Procedure –

This procedure entails that a notice be sent to the debtor calling upon the said debtor to provide evidence, under oath, about his financial ability. The Magistrate will then make a decision as to the amount the debtor should pay each and every month until the judgment debt, which includes the capital amount, interest as well as legal costs, is settled in full.

3.)    Emolument attachment order (EAO) or Garnishee Order –

These orders are issued by the Magistrate’s Court in favour of creditors who are trying to recover money owed by employees/debtors under judgments taken against them.This is probably one of the more effective collection tools in practice and entails a court to, with the written consent of the debtor, and on application by the creditor to issue an order, instructing the employer of the debtor to deduct a specific amount from his/her salary. The deduction will run for each and every month until the judgment debt is settled in full. The court will also only issue such an EAO that it is “just and equitable” following an inquiry into the debtor’s financial position.

Having regard to the above it is imperative to make sure that you document all your dealings with a person/company with whom you are conducting business. It not only amplifies your case to obtain judgment, but also makes live for your debt collector/attorney easier. It ensures a much faster process. It is further important that you chose your representative to collect the debt on your behalf with the utmost carefulness. You never send a person with a knife to a gun fight…



Del-Marco Matthee

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)