Debt Collection

The service of a Summons initiates the court process for obtaining judgment against a debtor for the repayment of debt:

• If defended by the debtor/defendant – the rules of court guide the litigation process including filing of a plea, pre-trial processes including discovery, set down for trial (approx. 1 year to judgement & R 30-50 000).
• If undefended – Submit an application for default judgement to court for a Magistrate to grant judgement in chambers and issue a court order.

• Warrant of execution (entitled sheriff to attach moveable assets of judgement debtor).
• Sale of attached moveable assets (obtain a date from the sheriff and publish notices in a local newspaper).
• Section 65 financial enquiry (call the debtor or directors of debtor entity to court for financial enquiry before a Magistrate – scrutinise financials and obtain a repayment plan ordered by the court)

• Litigation is expensive, and the process is lengthy and slow. Therefore, it is prudent to consider whether the capital outstanding is worth the costs and time it will take to obtain judgment.
  It is always strongly recommended (regardless of the amount outstanding) to send letters of demand to all debtors even if you do not intend to proceed to litigation and possibly “throw good money after bad money”.
  The reason for this is that often just the threat of litigation and the weight of an attorney’s formal letter is generally enough of an incentive to get a debtor to make payment or at the very least come to the table to discuss repayment proposals, etc.
• The recoverable legal costs are not the same as the fees charged by your attorney. Generally, you are only entitled to party, and party costs set by the court tariff unless otherwise agreed in contract or ordered by the court.
• The Prescription Act stipulates that ordinary debts prescribe or are extinguished by operation of law after three years of the debt arising or reasonably becoming aware of it arising.
  Therefore, it is necessary to serve Summons before the expiry of three years otherwise you may risk not being able to claim payment of your old invoices. It is advisable that you hand over debtors as soon as possible.
• Sometimes the creditor can be successful in obtaining judgement but then unable to get any money from the debtor which is colloquially called an “empty judgment”.
  It is still recommended, provided that the capital outstanding is not minimal, to incur the legal fees to obtain the judgment to avoid prescription because the Prescription Act also stipulates that a judgment only prescribes after 30 years.
  Therefore, as soon as the debtor’s financial position changes you can enforce the judgment provided it is less than 30 years from the date of judgment.