Not under Debt Review but in default with payments |
Before a creditor can initiate legal action against a consumer, they must follow specific steps outlined in the National Credit Act (NCA).
These steps are designed to ensure fairness and give the consumer an opportunity to address their debt responsibly. Here’s an overview of the process:
- Issuing a Section 129 Notice
The creditor must send a Section 129 Notice to the consumer. This notice informs the consumer that they are in default and provides them with options to resolve the matter. This notice is a critical step, as it gives the consumer a chance to avoid legal action by seeking help or settling the debt. These options include:
– Paying the overdue amount.
– Approaching a Debt Counsellor, alternative dispute resolution agent, or consumer court for assistance.
- Notification to Credit Bureaus
The creditor may report the consumer’s default to credit bureaus, which could impact their credit profile. This step is often taken alongside the Section 129 Notice.
- Waiting Period
After issuing the Section 129 Notice, the creditor must allow the consumer at least 10 business days to respond. During this time, the consumer can take action to resolve the debt, such as applying for Debt Review.
- Debt Review Option (Form 17.1)
If the consumer chooses to seek assistance from a Debt Counsellor, the Debt Counsellor will notify the creditor using **Form 17.1**. This form informs the creditor that the consumer has applied for Debt Review and that the Debt Counsellor is assessing their financial situation.
Once the Debt Counsellor determines that the consumer is over-indebted, they will issue *Form 17.2, confirming the acceptance of the Debt Review application. At this stage, creditors are prohibited from initiating legal action, provided the consumer adheres to the repayment plan.
- Initiating Legal Action
If the consumer does not respond to the Section 129 Notice or fails to seek assistance, the creditor can proceed with legal action. This involves:
– Filing a summons with the court.
– Serving the summons to the consumer, notifying them of the legal proceedings.
Conclusion
The NCA ensures that consumers are given a fair opportunity to address their debt before legal action is taken. By issuing a Section 129 Notice and allowing time for the consumer to seek help, creditors must follow a structured process that prioritizes resolution over litigation.