It just became much easier to wipe out a bad-debt judgment once you’ve paid up – but you may not want to

• An amendment to the law on how courts deal with bad-debt judgments came into operation this week.
• It means that once the debt is fully paid rescission – wiping out a judgment – is now possible without the need to show ‘good cause’.
• It is probably easier and cheaper for individuals to just reverse blacklisting at credit bureaus, though, but companies will benefit.
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It just became a whole lot easier to reverse a bad debt judgment in South Africa.
As of this week it is no longer necessary to show a court that there is a good reason to wipe out such a judgment, in a (previously fairly painful) process known as rescission.
Instead an individual or company now just has to show that the debt has been paid, in full and with any interest plus any costs that were due. On that basis alone a judge can reverse a bad-debt judgement, with or without the consent of the party that originally obtained the debt judgement, and can do so in chambers, without even the need for a court appearance.
That new system is set out in section 14 of a change to legislation, the Courts of Law Amendment Act, dating from mid-2017. But section 14, dealing with bad-debt judgments, only came into force on Monday, when President Cyril Ramaphosa declared it to be in effect.
Laywers who deal with debt collection and blacklisted consumers say the change is a radical one, yet will have surprisingly little real-world impact for blacklisted consumers, while companies could benefit significantly.
Until this week a debtor with an outstanding judgment had to provide “good cause” as to why such a judgment had to be reversed, says Nicole Andrews of Joselowitz & Andrews Attorneys, a firm with a special interest in debt matters.
Such actions tended to be complex and costly, with no guarantee that a court would accept the reasons given.
But practically speaking, many blacklisted people who have rehabilitated their finances may not end up using the new provision.
A bad-debt judgment will typically see consumers blacklisted by credit bureaus. Checks for new credit are usually against those credit bureau databases, not against court records themselves. And as of February 2014, in terms of regulations that apply to credit bureaus, they are required to remove information that related to bad-debt judgments once such debts have been paid.
That means a blacklisted person can write to the credit bureaus, have the details of a judgment removed, and access new credit, without having to go to court at all.
“For individuals who have paid their judgment debts in full, I would suggest having the listings removed in terms of the amnesty regulations; it is a quicker and more cost effective remedy than attending to a court application,” says Natasha La Vita of Berndt & La Vita Attorneys, which deals both in debt collection for companies and credit rehabilitation for blacklisted consumers.
That quick and cheap credit-bureau route only applies to individuals though, La Vita points out, while the new rules on judgment rescission can also be used by companies that have paid off their debts in full.

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