Can They Take Your Car?
They Want To Take Your Car – Do You Have To Let Them?
For many years now, creditors have found some quite ingenious and subtle methods to obtain payment from a defaulting consumer. These methods have included having an agent of the creditor show up at the consumer’s place of work and having them sign forms for either a consent to Judgment and an Emoluments Attachment Order (commonly known as a “Garnishee Order”) and then having such Order issued and implemented against the salary of the consumer. Normally the consumer doesn’t know the import or understand the nature of what he is signing but being uncomfortable at having an agent appear at his or her work for a debt related matter, the consumer quickly signs the papers in the hope that the agent will just go away and never return.
This undesirable practice has recently received media attention when the Stellenbosch Legal Aid clinic sought, amongst other declarations, an order declaring unconstitutional and invalid the practice of consenting to a Garnishee Order without any judicial oversight (i.e. without a court overseeing the process)[1]. It was a resounding success for many consumers when the High Court granted the prayers of the Applicants and declared such practices to be invalid and unconstitutional. And whilst the matters has been taken on appeal, it is likely that the Superior courts will ultimately confirm the Western Cape High Court’s findings and judgment.
‘Consumers… are not obliged to sign such forms and that it is only a sheriff of the court, armed with a valid court order that can repossess a vehicle. ‘
Unfortunately this is not the end of it. Consumers who are in default with their vehicle account are currently being contacted, and at times even threatened, by agents of credit providers with demands to hand over the keys to their vehicles. Sadly, the consumer – even one who has missed payments and is in default – does not always know that they are not obliged to sign such forms and that it is only a sheriff of the court, armed with a valid court order that can repossess a vehicle.
Deciding To Surrender Your Vehicle
In terms of Section 127 of the National Credit Act, 34 of 2005, a consumer may voluntarily return his or her vehicle to the credit provider in the event of not being able to afford the repayments for it. This can happen before or after the credit provider starts to threaten the consumer with legal action and judgements. In certain circumstances this would sometimes be advisable. For instance, when it is obvious that the consumer’s financial situation has deteriorated to the extent that he or she will not possibly ever be able to afford the repayments of the vehicle and that a debt review application would not be feasible or ‘workable’ (for example if you have had no household income for a long time).
By voluntarily surrendering the vehicle, the defaulting consumer is able to reduce his or her total indebtedness of the vehicle account and is able to avoid unnecessary legal costs associated with the recovery of the vehicle and the collection of the balance. The vehicle will likely be sold on auction for a third (hopefully more) of the outstanding balance and the consumer can then make a plan to repay the shortfall over time at a reduced monthly amount. A lot depends on the auction amount and the age of the vehicle and how long the consumer has had the vehicle and been paying for finance. However once the vehicle is sold the pressure to repay is a lot less and often times the creditor’s legal team will accept arrangements of much smaller monthly amounts.
Do You HAVE To Give The Car Back?
But what about the situation where it may not be in the best interests of the defaulting consumer to voluntarily surrender the vehicle? Does he or she “have to” hand over the keys to the creditor or the creditor’s agent on demand as they so often say one must? The answer is an emphatic NO!
This is true even if the creditor sends someone with a lot of papers that demand the car back. They may even look like draft court documents and look very official but not have a stamp from a court on…or even if it does it is important to note that you still do not have to hand the keys over. It is important to know, no creditor (nor a creditor’s agent) may force a consumer (in any way) to sign forms to surrender his vehicle voluntarily. If requested, or even if it is demanded of you, a consumer has the legal right to simply refuse.
The Creditors Rights
What then is the remedy available to such a creditor? Does this mean that their rights are non existent? Are they prejudiced in some way? No, they have legal remedies. Such a creditor must then simply approach a competent court for an order if they feel they have tried to communicate with the consumer but they do not wish to cooperate and once the specified time periods have passed. Creditors have to take certain legal steps along the way.
Step One: The Creditor has to send the consumer a letter (called a Section 129 letter) which advises the consumer to catch up on their arrears or to approach a Debt Counsellor for help. The letter will also warn the consumer that the creditor plans to send them a summons and go to court. The letter will say that the consumer has 2 work weeks to do something about the situation.
Step Two: Before a creditor can obtain a Warrant of Delivery from the court, Summons must first be issued and served upon the defaulting consumer at the address chosen by the consumer (this is usually the address chosen in the Credit Agreement that was initially signed by the consumer. It is important to note that the consumer has the right at any stage to notify the creditor or his change of address for the purpose of service of legal proceedings).
A Summons is just one of the first steps in a civil proceeding and it allows the other party (the Defendant – who in this case will be the consumer) to lodge a notice of intention to defend the matter where there is legal merit to do so.
‘not being able to make the contractual payments towards a vehicle account is not a legal merit to oppose a Summons’
Unfortunately not being able to make the contractual payments towards a vehicle account is not a legal merit to oppose a Summons, but between the default and the Summons, the consumer may have an opportunity to apply for debt review or to catch up on his arrears.
Step 3: It is only after the Summons has been served, and the consumer does not defend the matter, that the Credit Provider may approach the court and seek Judgment against the defaulting consumer, together with a Warrant of Delivery of the vehicle.
Who Can Take Your Car?
After a Sect 129 letter, a Summons (undefended) and a successful Judgement, the Warrant must be executed by a sheriff of the court not just some random member of the public.
Sometimes the legal representatives try to make a little more money from their client and try collect the car themselves with the Warrant. This is not right and the consumer can turn the collections person away. It is only an official Sheriff who is empowered to serve the warrant and take the car (and that is only if he has proper ID and all the right papers).
How Do You Know If They Really Are A Sheriff?
A consumer may require a sheriff to produce his official identification proving they are a real sheriff of the court. Anyone who alleges that he is a sheriff and cannot produce his identification as such, is in all likelihood an impostor and may be reported for fraud. Feel free to video them on your mobile phone while they claim to be a Sheriff. If it turns out they are not they have committed fraud. Likewise, any person who alleges they have a court order for the return of the vehicle and cannot produce a valid court order, would be an impostor and may also be reported for fraud. In this day and age of mobile phones with video capabilities do not be shy to video anyone who comes to try take your car or forces you to sign anything. The sooner in the conversation you do so the better.
We are not suggesting that consumers become wild outlaw cowboys. What we are suggesting is that the consumer should be cautious of impostors and know how to exercise their rights. It is sadly too common that consumers are tricked into signing forms they don’t understand or into handing over the keys to people when they do not need to.
Don’t Just Run Away or Stick Your Head In The Sand
Each matter should be taken on its merits and evading the Credit Provider when a vehicle account is in default is not actually the smartest way to deal with the situation. Often it will actually make matters worse and is normally more costly for the consumer. When in doubt, find out. If you are not certain what your remedial options are when you fall into default, why not contact a registered debt counsellor or seek professional legal advice?
A Special Thanks goes to Kim Armfield for assistance on this article. If you have questions about the topic feel free to mail her: kim@legalwc.co.za
Do You Need Urgent Help With Someone Demanding Your Car?
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[1] University of Stellenbosch Legal Aid Clinic and Others v Minister of Justice And Correctional Services and Others (16703/14) [2015] ZAWCHC 99; 2015 (5) SA 221 (WCC); [2015] 3 All SA 644 (WCC); (2015) 36 ILJ 2558 (WCC) (8 July 2015)