Hard collections is a term used to describe the collection of bad debt by means of legal action, therefore by issuing either a summons or liquidation/ sequestration application. This process is implemented after soft collection attempts have failed and no prospects of payment being made of the debtor’s own volition is foreseeable.
Once the matter is handed over for hard collection the process is initiated by sending a letter of demand to the identified debtor. This letter generally affords the debtor 10 weekdays to respond, failing which formal legal action is instituted. The process and steps utilized is fully set out below in our FAQ’s and Steps Followed in Legal Action
Hard Collections Questions
1. What is a Summons?
The Summons and particulars of claim are combined into one document called the Combined Summons. In the particulars of claim, the Plaintiff sets out its claim, which includes the cause of action and amount due, among other information.
2. How does service of the Summons work?
The Summons has to be served by the Sheriff of the Court. Service of the Summons can take up to two weeks under normal circumstances. Depending on the agreement that the action is based on, the Summons may in certain circumstances be affixed to the address chosen by the Defendant for service of documents. In other instances, the Summons must be served on the Defendant at his work or home.
3. What is a Notice of Intention to Defend?
Once a person is served with a Summons, he or she has 10 days within which to indicate whether they are intent on defending the action. This is done by giving notice in writing of such intention, this notice being brought to the attention of the Plaintiff’s attorney and the Court.
4. What is Summary Judgment?
Should a matter be defended as described above, the Plaintiff has the Summary Judgment Application to its disposal. This means that the Plaintiff can ask that Judgment be given at this early stage, due to the reason that the Plaintiff is of the belief that the Defendant has no grounds for defending the matter and has only given notice of its intention to defend in order to delay the matter. This Application is brought within 15 days after receipt of the Notice of Intention to Defend.
5. What is a Request for Default Judgment?
Should the Sheriff successfully serve the Summons and the Defendant does not defend the action as described above, the Plaintiff now has the option to ask for Judgment to be given in the absence of the Defendant. This is done by filing a request for same at the Court. A Magistrate will then consider the matter and grant Judgment if he or she is satisfied that the Plaintiff is owed the amount claimed.
6. What are the effects of a Judgment?
Once a Judgment is granted by Court, the Court Officials will provide the data to the Credit Bureaus for listing purposes. The Judgment amount, date and case number will be listed on all Credit Bureaus. The Judgment remains due and owing for a period of 30 years before it prescribes.
7. What is a Warrant?
Once Judgment is granted, the Plaintiff may proceed to issue a Warrant of Execution against the movable goods owned by the Defendant. The Sheriff will then proceed to attend the address that is provided to him or her and demand payment from the Defendant. If the Defendant is unable to make a cash payment upon demand, the Sheriff will attach movable assets which he or she finds on the premises of the Defendant and will draw an inventory of these assets. The assets attached in execution may be sold at public auction and the monies raised will be paid over to the Plaintiff in settlement of the debt.
8. What if the Defendant has no or insufficient movable assets to attach and sell?
Should the movable assets attached by the Sheriff be insufficient to settle the debt, the Plaintiff may proceed with other debt collection methods, such as a Section 65 financial enquiry or an application to declare the Defendant’s immovable property executable.
9. What does it cost to collect a debt by means of legal action?
From issue of summons to obtaining Judgment by Default will cost around R2 500.00 depending on the circumstances of each matter. Vermeulen Attorneys are happy to discuss providing services on the basis of an all-inclusive fee per instruction.
10. What is the approximate time frame of the process, start to finish?
This is very much dependent on various factors, ie the Court location and whether the matter is defended or not. If a matter is undefended, obtaining Judgment should be possible within 6 months. Should the matter however be defended, no estimation is possible and matters may take over a year to finalize.
Steps taken in Legal Action, undefended:
Letter of Demand sent in terms of the relevant legislation is sent to the Debtor;
Steps taken in Legal Action, defended:
1. Letter of Demand sent in terms of the relevant legislation is sent to the Debtor