What is a section 129 letter?

A section 129 letter is the notice issued in terms of section 129 of the National Credit Act (NCA) advising a consumer that they are in arrears on their payments.

This letter is the first step in the legal process and should be taken seriously by you in order to prevent further legal action.
Section 129, according to the NCA states:

If the consumer is in default under a credit agreement, the credit provider-

• A.      may draw the default to the notice of the consumer in writing and propose that the consumer refer the credit agreement to a debt counsellor, alternative dispute resolution agent, consumer court or ombud with jurisdiction, with the intent that the parties resolve any dispute under the agreement or develop and agree on a plan to bring the payments under the agreement up to date; and
• B.      subject to section 130(2), may not commence any legal proceedings to enforce the agreement before
• i.            first providing notice to the consumer, as contemplated in paragraph (a), or in section 86(10), as the case may be; and
• ii.            meeting any further requirements set out in section 130.

A section 129 letter can be issued if you have been in arrears for more than 20 business days, explains the Debt Counselling Industry (DCI).

“It is always best to deal with the creditors in writing. Keep a copy of times, dates and contacts you have dealt with as this becomes a very important issue when consumers make arrangements, only for the creditors to proceed with the next legal step, a summons,” said the DCI.
How to identify a section 129 letter

DebtBusters highlights that in order to comply with the NCA, a section 129 letter should contain key information:

• Name, ID and address of the consumer,
• Clearly “dated”,
• State the agreement which the client is in default and the specific amounts thereof; and
• Clearly indicate that the letter serves as “notice in terms of Section 129”,
• State in no uncertain terms that the consumer is in default,
• The intentions of the credit provider to enforce his rights as per the agreement,
• Possible remedies to avoid enforcement of the credit agreement by the creditor, and the
• Time frame available to institute remedies to avoid further legal action.

What should you do if you get served with one?

DebtFree DIGI says that you should reply to the letter immediately, in order to settle the dispute with your credit provider.

Your credit provider will want to know how you are going to solve the payment issue, or what steps you will be taking in order to ensure your accounts are paid in full.

“The intention is that the credit provider and the consumer resolve any dispute related to the agreement or to bring the payments up to date.  This will allow the account to be included into a debt review,” says DebtFree.

If you are unable to come up with a payment solution yourself, then DebtFree advises you to seek debt counselling.

However, if you are in the process of starting debt counselling, and receive a section 129 letter, you need to tell your counsellor immediately.