This is what you should do if you receive a judgement

If you fall behind on your monthly debt payments for more than twenty working days, your creditors will be forced to take steps to ensure the debt is settled.

Firstly, you’ll receive a Section 129 Notice, which will inform you of your outstanding debt. If you don’t take any action, you’ll be served with a summons and thereafter a judgment will be issued.

But what can you do once this legal process has started? We got in touch with a leading credit bureau to find out.

Tip: If you’re struggling with your debt, you may be in need of debt counselling. Complete the form on this page to get the help you need.

Steps to take after receiving a judgment

According to Experian South Africa, once a judgment is granted, you should immediately take action.

“Contact the attorneys and make arrangements to settle the debt, in order to avoid the sheriff attaching movable or immovable property and selling it at an auction to satisfy the debt,” Experian advises.

Your creditor’s attorneys may also opt to attach your salary, Experian says. To enable the deductions, your employer must be informed of the situation.

Take the following course of action if you have received a judgment: 

• Make preparations to start paying off the arrears account. Cut back on your expenditure and pay as much as possible towards this debt.
• Find out if the attorneys can negotiate with the credit provider, or arrange an alternative repayment plan.
• If neither of these are possible, seek debt counselling help. This may be an option for you if you have a lot of bad debt. It’s important to note that if you are under debt counselling before a judgment is taken, the credit provider has to stay the proceedings and can’t take legal action.
• If you manage to settle the judgment debt, obtain a settlement letter referencing the case number and submit it to the credit bureaus. The judgment will then be removed from your credit profile.

“You can undergo debt counselling, even if you have a judgment, but you must be able to make some form of payment and have a stable income, no matter how little it is,” says Experian.

The impact on your credit score

Judgments are never a good thing to have on your credit report. However, Experian points out that your credit report and score can still recover. The following points apply.

• Judgments remain on your credit profile for five years, or until the specific debt has been paid in full, abandoned, or rescinded.
• A removed judgment can't be taken into account in the calculation of your credit score. However, the debt relating to the judgment is still collectable for a period of 30 years. In other words, the removal of the judgment from your credit profile doesn’t mean the debt is no longer due.
• Note that credit scores take a long time to improve. While a judgment is damaging, consistent repayment of your debt and lower credit use will, over time, improve your credit score.

What if you can’t pay your debt?

Experian has found that the majority of people who are unable to meet their credit obligations simply do nothing. This is very bad practice, and isn't recommended.

If you are overindebted, Experian recommends that you take the following actions.

• Only take on debt that you know you can afford to pay back, in accordance with the payment schedule.
• When taking out credit, ensure that you are covered by credit life insurance for disability and death as a minimum. In addition, you may want to add a retrenchment benefit, especially if the credit amount is significant.
  Check your agreements carefully. Some providers make this mandatory and you may not even know that you have the benefit of this insurance.
• If you are in arrears by one to three months, try to make payment, and contact your credit provider to inform them of this.
• Don’t ignore calls from your creditors. If you know in advance that you may be unable to make full payment, or you are in arrears, phone them and make a payment arrangement.
  Most credit providers will be willing to help you with this.
• If you have credit life insurance, contact your provider and start the claim process.
  Make sure a trusted loved one knows about this insurance. In the unhappy event that you are incapacitated or that you pass on, they will need to make a claim or advise the estate attorney.
• Check your credit report regularly. If there is any incorrect or fraudulent information on your credit report, you need to take immediate action. Fraudulent activity could create a serious situation that could spiral out of control if it goes undetected and unreported.