Tuesday, October 5, 2010

CREDIT RECORD DAMAGED? DEALING WITH DEFAULT JUDGMENTS

Originally published by LawDotNews www.lawdotnews.co.za

You could find yourself on the wrong end of a default judgment in either of two situations: -
1.You dispute the claim and want to defend it, but failed to do so in time (usually because the summons wasn't served on you personally, and you weren't aware of it);or

2.You admit the debt, and just want to pay it.

In both cases, your credit record has been damaged. If you want to repair it, seek legal assistance to have the judgment rescinded. Don't delay - time limits apply.

Confusingly, the High Court and the Magistrate's Court have different requirements for rescission: -

• In the Magistrate's Court: -
1. If you deny the claim and intend to defend it, you must set out reasons for your default, and a defence to the claim.
2. If you admit the claim, you can either -
I. Obtain the creditor's written consent to rescission (invariably you will need to pay in full first!), or
II. If the creditor refuses consent and you don't want to defend the proceedings, then you must show "good cause" or "good reason" for the rescission, which would include stating the necessary facts to show that you were not in "wilful default", and that the judgment was satisfied or arrangements were made with the creditor to satisfy the judgment, within a reasonable time after it came to your knowledge.

• In the High Court however, whether you admit or deny the claim, you have to show "good cause" (also referred to as 'sufficient cause"), which has two elements: -
1. You must present a "reasonable and acceptable" explanation for your default.
2. You must show that you have a bona fide defence to the claim with "some prospect of success".

Critically, as a recent judgment illustrates, consent to rescission by the creditor is not enough in High Court matters. Whether or not you dispute the claim, you have to show that you have a defence to it as above - or live with the adverse judgment until expiry of the 5 year expungement period set by the National Credit Act.

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