Surrenering your goods to a creditor

SECTION 127 of the National Credit Act 34 of 2005

This section provides for a credit provider to terminate a credit agreement and institute repossession procedures where the consumer defaulted on a credit agreement. The consumer has a choice to voluntarily sign a notice (S127 Notice for the termination of an instalment agreement and the repossession of a vehicle) issued by the creditor. If the consumer does not want to sign the notice he can refuse to sign the Notice and demand a warrant of execution served on him by a sheriff. (This section is also applicable to goods purchased by the consumer under an instalment sale agreement). I will explain section 127 of the National Credit Act in red/green hereunder.

127 Surrender of goods

(1) A consumer under an instalment agreement, secured loan or lease –

(a) May give written notice to the credit provider to terminate the agreement; and (meaning

that the consumer MAY (NOT MUST) agree to and sign the S 127 Notice delivered by a

collector (usually it is a small piece of paper and not a formal letter (not acceptable because

it must be a formal notice on the credit provider’s Letter Head with the consumer’s details

and referring to S127 of the National Credit Act 34 of 2005). The Notice must also be

explained to the consumer. The collector has no right to force a consumer to sign the S127

letter or paper. He cannot repossess your vehicle if you refuse to sign the Notice. A

SHERIFF WHO CAN PROVE THAT HE IS A SHERIFF BY PROVIDING A VALID BADGE AND

PROVIDING A WRITT OF EXECUTION (meaning a summons was issued against you,

judgement was taken and then a writ of executing with a court stamp on it was obtained)

CAN REPOSSESS YOUR VEHICLE. A CONSUMER CANNOT REFUSE TO HAND OVER THE

VEHICLE TO THE SHERIFF BECAUSE HE CAN BE LOCKED UP for disobeying a court order. If

you sign a S127 Notice, you give voluntarily permission to the collector to take the vehicle.

You have no recourse (way out) after signing the S127 Notice if you are in arrears. If you are

not in arrears, you may unconditionally withdraw the notice you signed.

(b) If –

(i) The goods are in the credit provider’s possession, require the credit provider to sell

the goods; or (by signing the S127 notice, the consumer gives permission to the

creditor sell the vehicle. The credit provider must follow the provisions of S127

before he can continue).

(ii) Otherwise, return the goods that are the subject of that agreement to the credit

provider’s place of business during ordinary business hours within five business days

after the date of the notice or within such other period or at such other time or

place as may be agreed with the credit provider. (Meaning that the consumer, after

receiving the 127 Notice, voluntarily agreed with the credit provider to return the

vehicle to the credit provider’s place of business or as arranged (within 5 business

days or as per arrangement with the creditor after the notice (S127 letter) was

served on him and this must be done during ordinary business hours. Make sure you

take the vehicle to the credit provider to make sure that fraudsters do not steal your vehicle. It is happening because they obtain lists of people,intimidate them and get possession of the vehicle. The creditor is unaware of this and in these instances did instruct a collector to repossess. If the consumer does not know the law and his rights, he will hand over the vehicle and never see it again).

(2) Within 10 business days after the later of –

(a) Receiving a notice in terms of subsection (1)(b); or (this means that within 10 business days

after the creditor repossess the vehicle and before selling the vehicle, or)

(b) Receiving goods tendered in terms of subsection (b)(ii) (10 business days after the consumer

delivered the vehicle to the creditor)

A credit provider must give the consumer written notice setting out the estimated value of the

goods and any other prescribed information. (This means that within 10 business days, after

collecting the car, the credit provider MUST give you a written notice with the estimated value

of the goods).

(3) Within 10 business days after receiving a notice under subsection (2), the consumer may

unconditionally withdraw the notice to terminate the agreement in terms of subsection (1)(a)

(this means that the consumer, within 10 days after the vehicle was returned to the creditor,

may withdraw his permission to sell the vehicle and resume possession of any goods that are in

the credit provider’s possession, unless he is in default under the credit agreement. In practice,

(if summons was issued, the legal costs will also have to be paid) can be rectified. If a consumer did not default it must be shown that he did not default on the credit agreement.

(Creditors will instruct repossession if it was determined that the consumer is in breach of the credit

Agreement.

(4) IF the consumer –

(a) Responds to a notice as contemplated in subsection (3), the credit provider must return the

goods to the consumer unless the consumer is in default under the agreement; or (meaning

that after repossession, the credit provider did not issue a valuation quotation; you are

within your rights to ask for the return of the vehicle.

(b) Does not respond to a notice as contemplated in subsection (3), the credit provider must

sell the goods as soon as practicable for the best price reasonably obtainable. (This means

that if a consumer did not respond on the Notice from the creditor regarding the estimated

value of the goods the credit provider can continue to sell the vehicle, but it must be for a

REASONABLE amount).

Always make sure that the creditor as soon as

the vehicle was sold, informs you of the proceeds. Get your

own quotations (3 if possible) before the vehicle is repossessed

and make sure the amount received by the creditor is in

accordance with the quote the creditor gave you or the quotes

you obtained.) YOU ARE WITHIN YOUR RIGHTS TO TAKE ON

THE CREDITOR IF THE VEHICLE WAS SOLD OR AUCTIONED FOR

LESS THAN THE QUOTATION GIVEN TO YOU.

DO NOT BE INTIMIDATED IF A COLLECTOR TELLS YOU THAT HE IS GOING TO BREAK DOWN THE DOOR

OR WILL GET THE POLICE TO ASSIST OR LOCK YOU UP. This is intimidation and not allowed. Phone the

police or your security company to assist and phone your debt counsellor to assist with negotiations.

This gives the consumer and the debt counsellor time to do what is necessary to secure the asset