What is a Judgment?
When you fall behind with your accounts or fail to make payments and fail to respond to reminder letters, the credit grantor may sue you by issuing summons against you. If you don’t defend the summons the credit grantor will apply for a court default Judgment.
A Judgment is a court order. It is public record information, where the court orders an individual to pay a debt. A Judgment stays on a credit bureau’s records for five years, unless a court of law withdraws the judgment before this time.
What can you do if I have a Judgment against you?
If you can prove that when the judgment was granted against you, you were not intentionally in contempt of court or absent from the court and that you had a legitimate defense against the action instituted against you, you are entitled to apply for a removal of the judgment.
You are entitled to apply for a removal of the judgment if you have paid the plaintiff in full and the plaintiff consents to the removal – this is called an uncontested rescission of Judgment.
You and the plaintiff can also agree to abandon the Judgment. Notice of the abandonment may be filed in the court record, but this will not have the effect of deleting the judgment from the Credit bureaus database. Judgments are deleted from credit bureau records automatically after five years.
Default Data is information on non-payment of an account that is supplied by a subscriber to a credit bureau (such as a credit provider). All payment performance is recorded by the credit bureaus.
Other credit grantors when determining whether to grant you credit, in turn, use this to decide whether to grant you credit or not.
Default Data (where enforcement action has been taken like “handed over”, “repossession” or “written off”) remains on a Credit Bureau’s database for two years, while Subjective Default Data stays on your record for one year.
CPA (Credit Providers Association) subscribers normally do not remove default notifications, but amend to state that the ‘account was settled in full’.
When can a creditor apply for a judgment and what can you do to prevent this?
There are certain procedures that must be followed by any credit provider before legal steps may be taken against a consumer.
For example, the credit provider must first notify the consumer in writing of the status of his or her account and their intended action. It’s useful to note that ‘default’ means an account that is 20 or more business days in arrears.
In the notice, the credit provider must propose that the consumer refer the credit agreement either to a debt counselor, a consumer court or to an Ombudsman with the authority to handle any possible disputes.
This is to give both consumer and credit provider the opportunity to resolve the matter or agree on a plan to help the consumer bring his or her repayments up to date.
A credit provider cannot take legal action against a consumer before first notifying the consumer of the default and drawing the consumer’s attention to their rights in this regard.
Only when the consumer has failed to approach the credit provider or an Ombudsman within 10 days to resolve the matter, may the credit provider take further steps to enforce the debt.
An extract from All You Need to know about the National Credit Act, Volume 1 2007 (Section 129)
Debt procedures in court
A credit provider can approach the Magistrates’ Court to enforce a credit agreement, which is in arrears when the following has happened:
- The consumer did not respond to the written notice from the credit provider to bring repayments under a credit agreement up to date,
- The consumer refused to agree to a proposal made by the credit provider in a written notice, suggesting ways in which to resolve any dispute or to bring repayments up to date, or
- The consumer did not approach a debt counselor within the allowed 10 business days.
The point is that the court will only consider the credit provider’s request for a judgment, if the credit agreement is not subject to debt review. The credit provider cannot approach the court for a judgment, if the credit provider and the consumer have agreed on a plan to bring repayments up to date. In addition to if the consumer has stuck to his or her side of the arrangement.
What can you do?
Having access to your credit data from the three leading credit bureaus is vital in managing your credit reputation. By law, the three bureaus will give you a free credit report once a year.
Or you can get an aggregated view of your credit status from Kudough, giving you the full picture of exactly how much money you owe, and whom you owe it to. This gives you access to the information and wherewithal to dispute and successfully challenge any misinformation that may make its way onto your credit records.
It is in your best interests, whether you have a good credit standing, approaching debt trouble or are in trouble already with debt, to learn about your rights and responsibilities in regard to debt. Equip yourself with the knowledge and tools to manage your debt well.
Debt can be an immensely empowering personal financial management tool. It can give you access to money for investments and for lifestyle changing purchases and improvements. But manage it wisely and well. Be moneysmart.
To find out more about your credit score, get a credit report here.