At the end of May 2025, the High Court held that where notice is given by the credit provider to the consumer under section 129(1)(a) of the National Credit Act drawing attention to a default, the credit provider must negotiate with the consumer who wants to make arrangements to pay off the arrears. The credit provider may have to show what steps were taken when applying for judgment.
The consumer bought a vehicle and fell into arrears under the credit agreement of R112 888.19. The credit provider addressed a section 129(1)(a) notice to the consumer. The consumer contacted the credit provider to make payment arrangements to bring the arrears up to date and was advised that the credit provider required 50% immediate payment and the remainder of the arrears within three months. The consumer could not meet that obligation and an application was made to the high court for judgment against the consumer.
The court said:
“A creditor should engage meaningfully with a debtor. A section 129(1)(a) notice of the NCA is not a creditor’s ritual. It should never be equated to an empty box for a creditor to tick. It confers on a creditor certain responsibilities which are prerequisite central to the decision of the creditor to institute legal proceedings.”
Where the consumer wishes to make arrangements, the creditor should request information regarding the consumer’s financial health such as proof of income, reasons for not maintaining payments, a breakdown of monthly expenses and debts and other financial information so that a fair assessment of the consumer’s proposal can be made. When the creditor goes to court in circumstances where such a proposal is made, the application to court should not only provide a certificate of indebtedness but also a compliance affidavit dealing with the path of the negotiations after the section 129(1)(a) notice was served.
The court relied in its decision on the purposes of the NCA to address and correct imbalances existing in the negotiation power between consumers and credit providers and the other purposes of the Act set out in section 3 which protects consumers.