20 May Legal Steps to Take After Defaulting on a Loan
As a credit-active consumer in South Africa, you are obligated to maintain the repayment terms of your various credit agreements. Every action has a reaction, and when it comes to your finances, this is truer than ever. As with everything in life, plans do not always work out, which is why it can help you to be prepared and have a game plan. Here are the legal steps to take after defaulting on a loan. At Cape Town Legal Consultants, we provide credit clearance services to restore your name, and offer legal assistance in judgement removal and debt review removal.
Assess the Extent of your Default
The first step should be to determine how serious the default was. Is this the first payment you have missed, or have you missed several? Has the creditor taken any legal proceedings or handed over the account? You will need to evaluate the situation properly to know exactly where you stand financially.
Some credit agreements have a grace period and your contract may include terms around defaulting. In South Africa and as per the National Credit Act (NCA), the law requires that a creditor issue a Section 129 notice before any legal action can be taken against you.
Know your rights as a consumer. As a borrower, you are legally protected from reckless lending and have the right to dispute debt and apply for Debt Review. If you need a legal consultation or expert guidance, we are here to help you.
Review your Loan Contract
The contract you sign for your loan is just as much to protect you as it is to protect the lender. Some things to look for in your contract include penalties for missed or late payments, clauses on defaults and legal action, and what your rights and obligations are as a borrower. Your creditor will need to follow the legal steps to take after defaulting on a loan, and you can be sure of them by reading your contract.
If you are overwhelmed by the legal complexities, let Cape Town Legal Consultants help you. We work with clients facing financial stress and understand that it can be unsettling!
Contact the Creditor
If you consider what motivates creditors, you’ll understand that being forthcoming can count in your favour. Creditors simply want you to repay what you owe. If you have fallen behind, get in touch with your creditor and give them insight into your situation. If you are struggling to manage your debt, consider Debt Review for a debt restructuring plan.
Have you already undergone debt review and still have a bad credit score? We can help achieve ITC Clearance, giving you the chance to be financially stable. Developing a healthy relationship with money makes all the difference when it comes to repaying your debts on time.
Monitor your Credit Score
Defaulting on a debt payment can negatively affect your credit score. Be proactive by checking your credit report regularly – you can access your FREE CREDIT CHECK right here. We also advise that you refrain from taking out new credit until your finances are restored.
How often does your credit score refresh? Your credit score will reflect an updated credit score at least once a month. It all depends on how you are managing your debts and your credit behaviours. While your credit score reflects defaults and judgements rather quickly, it can take much longer to clear your name.
Are you struggling to keep up with your financial responsibilities? There are many ways to take control of your circumstances through effective debt relief programmes. For any legal assistance, contact us today!