Debt and Rescission of Judgement: what does it mean?With the sea of debt problems rising about our ears, it is good to get to grips with some of the laws surrounding debt and its consequences – because with every will in the world, there are always complications. Rescission of Judgement is the end tale of getting into debt. So let’s begin with the beginning. If you have ever defaulted on an instalment or not paid your debt in terms of a credit agreement, and you fail to make amends, you may find that a Default Judgement can be ordered against you. This is usually set in motion by the person or company to whom you owe the money. Default Judgements include the outstanding capital due, interest and legal fees. One would think that sorting out this situation out would be quite simple: just pay the debt and the Default Judgement will be rescinded. But, while getting into trouble can prove rather quick and easy, getting out requires the wheels of justice to turn, and we all know this is not necessarily the fastest motion in the world.
Default Judgement: getting into troubleThe first inkling you will have that trouble is on the way, is when your credit provider (the person to whom you owe the money) or his attorney, sends you a Section 129 Notice, in terms of the National Credit Act No. 34 of 2005, advising you that you have defaulted on your debt. At this point, you are asked to settle the debt or face further legal action. You can pay up or hand the problem over to a debt counsellor to sort out, or you can dispute the accusation. If the latter, you can enter into an agreement with either a dispute resolution agent, the consumer court, or an ombudsman with jurisdiction. These actions are taken with a view to finding an agreed resolution or formulating a plan to bring your payments up to date. However, if none of this gets underway, a summons can be issued in the event of the debt not being settled or lack of arrangement for settlement that is acceptable to both parties. This is where things can get awkward. The summons can be delivered personally to you, or delivered to your address noted in the original legal contract. If there’s been a change of address, it is up to you to have notified the other signatory on the contract. If you now fail to respond to the summons or fail to appear at the court proceedings, the judgment is issued against you in default. This Default Judgment is then held on the system of Credit Bureaus. This is known as being blacklisted. This means that while that Judgement is there, you will not be able to get any credit from financial institutions. Getting yourself untangled from this situation is not an easy business.
Rescission of Judgement: getting out of troubleA Default Judgement against you is an order from the Court, stating that you have to pay the outstanding debt to the person or company to whom you owe the money.
- If you have such a Judgement against your name, you can expect your credit rating to decrease due to the fact that you will now be considered high risk for any future lenders or creditors. For instance, if you wish to apply for a housing bond, you will not be granted the loan by the bank until this judgement has been removed from your credit report.
- This is where Rescission makes an appearance. Once the Default Judgement is listed at the Credit Bureaus, it will not be removed unless rescinded by either the High Court or a Magistrates Court through a Rescission Application.
- If the Judgement originated in the High Court, you will need to prove that judgment was granted in error, and that you were not in wilful Default of the account. You will need to prove that a payment arrangement was in place; and/or legal notices were not properly received.
- It’s important to note that while the debt may have been settled, and therefore a positive factor in the rescission argument, this is not necessarily a basis for bringing the Rescission Application in the High Court. Even consent from the credit provider to rescind the Judgement, while positively supporting, is not a basis on which the application may be brought. Therefore, as a consumer, you should never take Default Judgements on your credit report lightly.
- The removal of a Magistrates Court Judgement through a Rescission Application is similar but requires the Judgement debt to be fully settled. Only if you have paid the debt fully, including interest and legal fees, can you then apply to the Court for Rescission of Judgement, and have the Default Judgement against you deleted from the Credit Bureau records.
The process of action in an application for Rescission of Judgement
- Ensure that the debt is paid in full.
- The creditor must agree in writing to the rescission or variation of judgement. This application must be viewed as proper consent.
- The consent affidavit should: Identify the creditor; Identify the debtor; Identify the person giving the consent; Confirm the authority of the person giving consent on behalf of the creditor; Confirm the existence of: the debt, the Default Judgement, the case number, and confirmation of consent. The application must also include that there is good cause for the Court to rescind the Judgement.
- A copy of the application by the debtor must be filed with the Clerk of the Court.
- The application will be set down for a specific date in court.
- The application is heard in court before a presiding officer and in the event that the presiding officer is of the opinion that all the legal requirements have been met, he or she will grant the Rescission of Judgment order.
- Once the application is granted, the Default Judgment is rescinded and deleted from the court file. A court order to this effect can only be issued after the Court has rescinded the Default Judgment.
- The Rescission Application needs to be done within 20 days of obtaining knowledge of the Default Judgment.
- The court may also rescind any judgment where it has good reason to do so.