In the current economic down turn, you may find yourself falling behind on your monthly car payments. We provide you with all the available options to help you prevent your car from getting repossessed by the bank or loan/credit provider.
Times are tough. If you have found yourself drowning in debt, you might even be facing the threat of vehicle repossession.
Vehicle repossession can happen when you are still paying off your car but are unable to come up with the money you owe the bank or loan company. They might then follow a legal process to take the car back from you in order to cover their costs.
However, even in this case, you still have rights according to the laws of South Africa.
Our Legal&Tax expert answers some of your key questions about this matter.
The National Credit Act provides that any creditor can send you a Section 129 letter of demand if your account is 20 days or more in arrears. They can start the collection process after 1 default.
This process is initiated with a Section 123 letter of demand, followed up with a summons and finalised at court resulting in a legally enforceable court order which authorises the repossession via a warrant of execution.
After the vehicle has been taken away from you, it will be sent to an auctioneer. An auctioneer is someone who will sell the car on behalf of the bank/company. However, the auctioneer has to store the car for about 10 days, in order to give you a chance to come up with the money you owe, or make some kind of other arrangement. If you cannot do so, the car will then be sold.
Consult a Legal&Tax expert for assistance before taking any dramatic action. The process for vehicle repossession is very complicated and you need a professional to guide you through it.
Be very careful if a debt collector comes to you with their company’s forms. This is not a legal process as they are trying to force you into a voluntary surrender and you do not have to agree to this.
The bank/loan company can only use an official and original court order with a stamp from the court on it, in order to carry out a vehicle repossession. This order is called a Warrant of Execution.
They would also first need to have issued a legal document called a summons to you, which would give you a chance to defend yourself.
These documents would have to be delivered to you via a Sheriff of the Court.
If you are presented with documents threatening vehicle repossession, contact one of Legal&Tax’s legal advisors to check if these are legally valid.
This is when you willingly hand back your vehicle. It is an option you can choose, but you cannot be forced into it.
If you want to surrender your vehicle, then contact the bank or loan company and tell them that you cannot make payments on the vehicle anymore. You will then arrange a time and place to return the car. The advantage of this is that you will not be charged for the costs of the repossession. It is a quicker and easier option in some cases.
Yes, ideally prevent the problem before it occurs. If you know beforehand that you cannot make a payment, contact the bank and talk to them. They will try and help make a plan to assist you, as long as you know you are able to start making up for the late payments. For example, maybe they can adjust the amount you pay per month by making the length of time of the loan longer.
Make sure that whatever agreement you make is in writing. Legal&Tax can assist you with ensuring that you come up with a plan that is fair and reasonable to both parties.
If you know you are in financial trouble, you can also consider selling the car yourself. This means that at least you will sell it at a price of your choice and be able to more easily cover the loan amounts still owing.
Often at an auction the car can be sold for far less than it is worth, this means that even after having the car repossessed, you might still owe the bank more money.
Legal&Tax offer professional debt counselling. Once you apply for this process, you will get help organising how to pay back the companies to whom you owe money. During debt review, your vehicle cannot be taken away from you. However, this can only apply if you have not yet been issued with a summons.
Legal&Tax is your companion along every curve in the road.
Contact us to speak to a legal advisor that will assist you in finding a solution that can help you keep your vehicle.