What is a section 129 notice and what should I do about it?

A section 129 notice is a formal written warning from a credit provider that you are in default on a credit agreement, and that legal action will follow unless you act. Section 129 of the National Credit Act 34 of 2005 requires the credit provider to send it before it may enforce the agreement in court. The notice must propose that you refer the agreement to a debt counsellor, a dispute resolution agent, an ombud or another alternative dispute resolution body, with the aim of resolving the dispute or agreeing a plan to bring the payments up to date. The credit provider must then wait the period the Act sets before it can issue summons.

What you should do about it depends on your position, but the short version is: do not ignore it. The notice is the last point at which you have real options that cost little. Once summons is issued, the options narrow and the costs rise.

How a section 129 notice works, step by step

Default. You fall behind on a credit agreement, whether a credit card, a personal loan, a store account, vehicle finance or a home loan. The Act requires that you have been in default for a minimum period before the notice can be sent.

The notice. The credit provider drafts a written notice. It must identify the agreement, state that you are in default, and propose the referral options set out above. It must be delivered to the address you chose in the agreement, in the way the agreement or the Act allows. Courts have held that the credit provider must be able to show the notice actually reached the point where you could have received it, not merely that it was posted.

The waiting period. After delivery, the credit provider must wait the period the Act sets, counted in business days, before it may issue summons. The Act also requires that a minimum period of default has passed. Check the dates on your own notice and count the days.

Your response. Inside the window you can pay the arrears, propose a payment arrangement, apply for debt review, refer the matter to the relevant ombud, or dispute the debt. Each of these has a different effect, explained below.

Summons. If the window passes and nothing has changed, the credit provider may issue summons. In the summons it must allege that the notice was sent and that the waiting period has passed. If it cannot prove that, the case can be stopped at that stage.

Judgment. If you do not defend the summons, or you defend it and lose, the court grants judgment. Judgment leads to execution against your property, an emoluments attachment order against your salary, or in the case of a house or car, an order allowing the asset to be sold.

A worked example

Take Lerato, who has a personal loan with a monthly instalment of R2 100. She lost some of her income and missed three instalments. Her arrears are R6 300 and the credit provider sends a section 129 notice to the address in her loan agreement.

Lerato has three broad choices. She can pay the R6 300, or part of it with a written arrangement for the rest, which brings the account up to date and stops enforcement on that account. She can apply for debt review if her other accounts are also unaffordable, which protects this account provided the application is made before summons is issued. Or she can contact the credit provider's dispute department or the relevant ombud if she believes the balance is wrong.

She checks the balance using the debt interest and in duplum calculator and finds that the arrears figure looks right. She cannot pay R6 300 at once. She writes to the credit provider inside the window, offers R1 000 a month on top of her instalment until the arrears are cleared, and attaches her budget. The credit provider accepts. No summons is issued. These figures are illustrative only and your own numbers will differ.

What to do this week

Read the notice properly. Identify the credit provider, the agreement, the arrears figure and the date of delivery. Write the last date of the waiting period on your calendar.

Check the debt. Confirm that the account is yours, that the arrears figure is right, and that the debt has not prescribed. Our guide on how to check if a debt has prescribed and the prescription checker will help. A section 129 notice on a prescribed debt does not revive it, but responding carelessly can complicate your position, so get advice before you write anything about a debt that may have prescribed.

Decide on the route. If you can pay, pay and get written confirmation. If you can pay some, propose an arrangement in writing. If this account is one of several you cannot afford, speak to a registered debt counsellor this week. If the debt is disputed, raise the dispute in writing with the credit provider and, if needed, with the ombud.

Put everything in writing. Phone calls are forgotten. An email or letter with a date is evidence that you responded inside the window.

Do not wait for a second notice. There is not usually a second notice. The next document is the summons.

Documents to gather

• The section 129 notice itself, with the envelope or the email showing the delivery date.
• The credit agreement and any amendments.
• Your last twelve months of statements on the account.
• Proof of every payment you have made, especially any payments the credit provider does not appear to have credited.
• Your payslips and a monthly budget, if you intend to propose an arrangement or apply for debt review.
• Any earlier letters, notices or emails from the credit provider or a collector.
• A current credit report from a registered bureau.

A realistic timeline

Day 0. The notice is delivered to your chosen address.

Days 1 to 10 business days. This is your working window. Pay, arrange, apply for debt review or dispute. Keep proof of what you did and when.

After the window. The credit provider may issue summons. A summons must be served on you by the sheriff and gives you a set number of days to enter an appearance to defend.

Weeks to months. If you do not defend, the credit provider applies for default judgment. If you defend, the matter follows the ordinary court process and can take many months.

After judgment. Execution steps, such as an emoluments attachment order or the sale of an asset, can follow. Our guide on emoluments attachment orders explains that process.

Common mistakes and what they cost

Ignoring the notice. Summons follows, then judgment, then legal costs added to the debt and an execution step against your salary or assets. The judgment also goes on your credit record.

Paying cash to a collector without proof. If the payment is not credited, you have paid and are still in default. Pay into the account named on the agreement, or get a written receipt.

Applying for debt review after summons. An account on which summons has already been issued may be excluded from the protection of debt review. The timing matters. If you are going to apply, do it inside the window.

Making a partial payment on a prescribed debt without advice. An acknowledgment of a prescribed debt can affect your position. Check prescription first.

Assuming an SMS or a phone call was the notice. A section 129 notice must be a written notice delivered as the Act and your agreement require. If you have only had calls, you may not yet have received a valid notice. That does not mean it is safe to wait, but it is a point to raise if summons follows.

Your rights and the credit provider's rights

You are entitled to a written notice delivered to your chosen address, to the waiting period the Act sets, to the referral options the notice must offer, to an accurate statement of what is owed, and to bring the account up to date and stop enforcement on it. If the credit provider skips the notice or cannot prove delivery, you are entitled to raise that as a defence to the summons.

The credit provider is entitled to send the notice once you are in default for the required period, to issue summons once the waiting period has passed and nothing has changed, and to recover its costs of collection and enforcement within the limits the Act sets. It is entitled to decline an arrangement it considers unworkable, though most credit providers accept a realistic offer because it is cheaper than litigation.

If you cannot afford an attorney

You do not need an attorney to respond to a section 129 notice. Paying, arranging or applying for debt review can all be done directly. A registered debt counsellor's fees are regulated and come out of your monthly payment.

If the credit provider will not engage or you believe the balance is wrong, the Credit Ombud within the National Financial Ombud Scheme South Africa resolves disputes about credit agreements at no cost. The National Credit Regulator on 0860 627 627 takes complaints about credit providers that breach the Act. If a collector rather than the credit provider is pressing you, the Council for Debt Collectors regulates collector conduct. If summons follows and you want to defend, Legal Aid South Africa on 0800 110 110 can tell you whether you qualify, and our legal aid page explains the means test. Our page on what debt and credit matters cost sets out what representation costs if you need it.

Frequently asked questions

People often ask whether a section 129 notice means they are being sued. Not yet. It is the step before a summons. It is a warning with options, and the options are real.

They ask whether they can be sent a notice if they have only missed one payment. The Act requires a minimum period of default before the notice may be sent. Check the dates on the notice against your own records.

They ask what happens if they never received the notice because they moved. The credit provider is entitled to send it to the address in the agreement unless you notified a change in writing. Update your address with every credit provider whenever you move, in writing, and keep proof.

Finally, people ask whether paying the arrears means the credit provider must stop. If you bring the account fully up to date, including permitted default charges, before the credit provider has taken further steps, enforcement on that account stops. If you have only paid part, you need a written arrangement.