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Saving your car in tough times
But what if you can't afford the installments any more? The bank can repossess your vehicle. However, there is a legal process that must first be followed, and consumers need to understand it to protect themselves. You as the consumer should know your rights and what the law specifies in this matter.
There are two ways in which a bank can legally take possession of your vehicle. "In the first instance, a court order must be obtained ordering you as consumer to allow the vehicle financier to take the vehicle. If there is no court order however, they cannot force you to give your car back. Alternatively, it can be done through voluntary surrender in terms of the National Credit Act," says Wikus Olivier, Debt Management Expert at DebtSafe, a trusted debt review company in South Africa.
Voluntary surrender of the vehicle is most credit providers' first choice because it's an easier, quicker and cheaper method to get the vehicle back. Olivier warns that consumers must not be so easily intimidated when 'someone from the bank' hands over a form for them to sign whilst trying to take possession of the vehicle. Any bank form you sign other than a summons, are most likely an agreement that you're voluntarily giving the vehicle back. Few consumers realise that they are under no obligation to sign such a form and hand over the vehicle.
"Unfortunately credit providers often blatantly bully consumers, and I want to make it very clear that at this stage you don't have to hand over your vehicle," he explains.
Should you find that you can no longer afford your vehicle, and are not in arrears with the payment thereof, you may choose to make use of Section 127 of the National Credit Act and voluntarily surrender your vehicle. To arrange this you must give a written notice to your credit provider stating that you wish to terminate the credit agreement and that you require them to pick up the vehicle. As specified by the Act the credit provider must then furnish you with a letter within 10 days, indicating the estimated sale value of the vehicle. You can dispute the value if you are not satisfied with it, withdraw your notice and resume possession of your vehicle - but only if you are not behind on your installments.
In the case of a voluntary surrender, the bank is obliged by the Act to sell the vehicle as soon as possible and for the best price reasonably obtainable. It is important to realize that when the vehicle is sold at an auction, you as the consumer are still liable to pay the shortfall if the vehicle is sold for less than the outstanding balance on the account - you could end up paying for a vehicle you don't even have anymore. Some however may feel that it's better to pay a reduced premium on a smaller amount, even if they don't have the asset anymore, than paying a high premium for an asset they have but can't afford.
On the other hand, if the credit provider wants to litigate and get a court order for the repossession of the vehicle, a summons must first be served on you. A court date will be set, where you can present your case. This is one more reason to ensure that your credit provider always has your latest address on file, for without it the summons will still be served but you won't know about it. Subsequently you will also not know about the court date or be able to appeal your case in court. "If you tried to negotiate with the service provider for an adjusted payment plan, the Magistrate might understand and there could be some sort of leniency in the matter, possibly suggesting a reduced monthly premium over a longer period, to accommodate both parties" Olivier says. However, if there is no record of negotiations, the vehicle may be awarded to the creditor to sell at any cost they deem reasonable to cover their expenses - and you may still end up paying the shortfall if it was sold for less than your outstanding balance.
A way out
There is an alternative solution that could help you keep your vehicle, namely debt review. Olivier explains, "As soon as you send your application form with the required documentation to the debt review team, a document (form 17.1) will be sent to the credit providers to inform them that you have applied for debt review. As of that moment your vehicle is protected against repossession, provided that no summons has been issued yet.
"A huge advantage of our debt review program is that we negotiate reduced installments on your accounts; including your vehicle finance. In essence it means you get to keep your vehicle for a reduced monthly installment,"
Whilst the debt review program is not a payment holiday - you are after all still liable to settle all your debt - it provides breathing space in overstretched budgets and helps consumers to stay on their feet, with their critical assets in tact.
For more information visit http://www.debtsafe.co.za
Liza du Plessis