By: Natasha Archary
A number of South Africans are finding it harder to make ends meet, and car repossessions are on the rise in a difficult economy.
Many South Africans find themselves in the unfortunate situation of not being able to pay for their vehicles, which as a result translates to the repossession of your car, which could result in your car going up for auction.
Nerosha Maseti, Lead Ombud for the Banking Division at the National Financial Ombud Scheme joins Gugulethu Mfuphi on Kaya Biz to help listeners understand their rights when it comes to car repossession.
Full open and honest disclosure is what Nerosha stresses people who are in default of their vehicle repayments give the banks and she urges people to understand the legal ramifications and costs involved.
While some borrowers attempt to use the excuse of the Debt Prescription Act, Nerosha warns that a judgement from the court, and warrant for delivery of the vehicle may still be issued.
Some banks also use car tracers and number plate scanners to locate the vehicle if you are in default, and have been unreachable.
Debt Prescription Act
The Prescription Act basically means that any contractual and delictual debts extinguish after 3-years from the date when it became payable or due.
This is when the bank has not collected has not collected an installment for 3 or more years, then the bank is legally not entitled to pursue that debt, and the consumer is not obligated to make payment to the bank.
The benefit of this is that the customer’s Trade Bureau must be updated to never reflect the debt on the customer’s profile.
However, there are conditions to this because customers shouldn’t be misled into believing that they can just stop making vehicle repayments without repercussions.
For example, if the customer has received calls, letters, or emails from the bank and does not acknowledge the debt or that they received the communication, then the bank cannot hold the customer liable for payment after 3 years.
But, if the customer takes a call from the bank, identifies themselves, and acknowledges the debt then the bank has the right to pursue that debt.
Consumers are advised to bring disputes to the Ombudsman for Banking Services if:
- Outstanding balances on the vehicle finance account
- Unfair treatment by banks and their debt collectors or tracers
- Unilateral changes in the contractual terms and conditions
- Prescription related disputes
