Debt Recovery Litigation Process
Dec 2020 | Legal Update | Debt Recovery

This article outlines when it may be necessary to institute legal action as well as how to go about doing it in terms of the litigation process for debt recovery. We shall be looking at who the plaintiff is and who the defendant is as well as the role of the court.

When to Handover an Account to an Attorney for Debt Recovery

During the debt recovery process, a debt collector should always try to consult with a debtor in order to negotiate an acceptable arrangement as to when the overdue amount will be paid. However, as you may know, this is not always the case. The debt collector may then need to explore more drastic measures in its endeavour to recover any overdue amounts.

Should the debt collector not feel able or experienced enough to proceed further, then it may be in their best interest to hand over the matter to a more experienced person such as an attorney. This should only be done as a last resort if the debt collector has exhausted all reasonable attempts to recover the outstanding balance. Below are some of the main differences between an attorney and a debt collector.


  • Begins with legal process immediately.
  • Gets paid regardless of results.
  • Are not always effective at finding missing debtors.
  • Will usually advise the credit provider of options available and let them make a decision.

Debt Collector

  • Will negotiate a Point to Point (PTP) with debtor.
  • Payment is based on what is collected.
  • Experienced at tracing missing debtors.
  • Will often pursue the debtor via any possible legal means.

The National Credit Act indicates that a credit provider may begin with legal proceedings as early as twenty days of the consumer being in arrears. However, this may only be done via the correct channels. Section 129 of the Act places an obligation on a credit provider to notify the consumer of its intention to hand them over for the commencement of legal proceedings prior to doing so.

Simultaneously, the credit provider must advise the consumer of their right to visit a debt counsellor. Should the consumer after ten days not have applied for a debt review with a debt counsellor, the credit provider may then proceed with further legal action. In a case where the consumer has applied for debt review no legal action may be taken until it has been found by a court or a debt counsellor that the person is not over-indebted.

An Overview of the Debt Recovery Litigation Process

The litigation process may become quite complicated when a debtor decides to defend the matter. However, this rarely happens in matters where credit was issued and not repaid. For the purpose of this article we will only be looking at the process one would follow to recover money where the debtor has chosen not to defend the action.

We will only focus on a few documents which one would use to get a judgment granted and place an Emolument Attachment Order (EAO) on a debtor’s salary. Below we will take a brief look at the following documents to determine their purpose and what each of them should contain when used in the litigation process.

Registered Letter of Demand

In terms of section 56 of the Magistrates’ Court Act 32 of 1944, before issuing a summons, it is advisable to send a letter of demand to the debtor as an indication of the seriousness of the matter. However, this is not a compulsory requirement. If you, however, wish to claim interest on the debt (at 15.5% per annum) as allowed for in the Magistrate’s Act as and legal fees, it is advisable to send a letter of demand. The letter of demand must have a heading stating that it is a letter in terms of the Magistrates’ Court Act and must describe the nature and purpose of the claim.

In other words, there needs to be sufficient information for the debtor to identify what the claim is for and how much is being claimed. The letter should give the debtor a period of ten business days to pay the amount claimed or an opportunity to make a payment arrangement with the creditor. The letter can be sent by registered mail, served by the Sheriff of the court or delivered by hand (make sure to get an acknowledgement of receipt).


Should the claim not be settled by the debtor after receiving the letter of demand, it will be necessary to file a summons with and have it issued by the clerk of the Magistrates’ Court if the amount being claimed is less than R100 000 or the Registrar of the High Court if your claim is more than R100 000. A summons is usually drafted in a standard format and has a particulars of claim attached to it. The particulars of claim may be included in the summons itself if it contains less than 100 words. Alternatively, it needs to be attached to the summons as an addendum and contains finer details about the claim. The particulars of the claim are a detailed account of how the claim arose and what amount is being claimed. When the summons is drafted, the credit provider is listed as the Plaintiff and the debtor is listed as the Defendant.

The Plaintiff may draft the summons themselves and attach a copy of the initial loan agreement to it. The summons needs to be stamped by the clerk of the court and the Plaintiff may arrange to have it served on the Defendant by the sheriff operating in the jurisdiction of the Defendant. A summons must be served by the sheriff of the court. Once the sheriff has served the summons, he notifies the clerk of the court and the Plaintiff by handing over a return of service stating the time and manner of service.

A summons should contain the following information:

  • The name and address of the Plaintiff
  • The name and address of the Defendant
  • A form of notice of intention to defend
  • A notice advising the Defendant that they have ten days to enter a notice to defend.
  • A form of consent to judgment
  • A notice drawing the Defendant’s attention to the consequences of their failure to obey the order of the court once judgment has been granted against them.
  • The particulars of the claim which must contain:
    • Citation: details of the Plaintiff and Defendant;
    • Jurisdiction: that the court has jurisdiction because either the action arose in its area or that the defendant resides or works in the court’s jurisdiction;
    • The cause of action: what is the basis of your case, e.g. loan agreement;
    • Statement that damages are being suffered by the Plaintiff and that the damages are caused by the Defendant, and
    • Prayer: what relief you are asking for (be sure to include legal fees and interest).

Application for Default Judgment

This application may only be filed once the prescribed period for entering a notice to defend has lapsed after the debtor has received the summons. The Plaintiff may then submit a request for default judgment to the clerk of the court.

This is a judgment granted in the absence of the Defendant due to their failure to enter a notice to defend the action after receiving a summons. Once the judgment has been granted, it is valid for thirty years and allows the Plaintiff to explore different methods of collection, one of which is the Emolument Attachment Order (EAO).

Even though the inclusion of ID numbers is not a legal requirement for a valid default judgment, it is preferable to add in order to assist the credit bureaux to list the default judgment on their respective databases. This in turn will help you as a credit provider to minimize your risk.

Application for an Emolument Attachment Order (EAO) or Garnishee Order

These are instructions given by the court, usually instructing the employer of the debtor to deduct a specified amount of money from the debtor’s salary owed by the debtor to a third party. This deduction requires the consent of the debtor.

It is best to get the debtor to sign an acknowledgement of debt and consent to the emolument attachment order being placed on their salary before making an application for the EAO to the court. The deduction will run until the debt has been settled. This amount may be deducted as regularly as the debtor receives their salary and must be paid over to the creditor by the employer of the debtor periodically.

This method usually prolongs the repayment process but is effective in securing regular instalments. These orders of court have proven to be effective not only in credit-related matters but also in other instances such as child maintenance claims. Should the debtor not consent to the application for an EAO then the next step would be to get the debtor to appear in court in terms of S65 financial enquiry.

For this enquiry, you need to arrange a date with the clerk of the court and have an attorney representing you. The debtor may represent himself and is expected to give an account of his monthly income and expense. The court then decides how much they should pay monthly.

Instruction letter to debtor’s employer

Once the Emolument Attachment Order has been granted by the court, a copy must be served on the debtor’s employer. It is best to attach an instruction letter explaining to the employer exactly what is required of the company. Such a letter and the court order should be delivered directly to the salaries department to avoid unnecessary delays.


An important factor to consider when approaching a court with this process is jurisdiction. As the Plaintiff instituting an action, you need to ask yourself whether the court you are approaching has the jurisdiction to deal with the matter. For example, a Labour Court would not have the jurisdiction to hear a matter where a personal loan was not repaid by a debtor.

A court has jurisdiction over anyone who lives or works in the magisterial district, anyone who owns fixed property in the magisterial district or who has agreed to the jurisdiction of the court. If the dispute arose in the magisterial district of a particular court it is likely that the matter would be instituted at that court.

When consumers fall behind in paying their creditors (“Judgment Creditors”), creditors may obtain a court order against the debtor (“Judgment Debtor”). The court order will include the outstanding capital due, interest and legal fees/costs, as determined by a competent court.

The Superior Courts Act, 2013, was amended by the insertion of Section 23A, which came into effect on 11 March 2019. This amendment brings about alignment with the National Credit Act by allowing rescission of judgments where the judgment debt, interest and costs have been paid up. It also makes provision for rescission of a judgment debt with the consent of the Judgment Creditor without having to show good cause.

The amendment was drafted in 2014 to ensure a more consumer-friendly approach to rescission applications, which previously proved to be very expensive and time-consuming.

The Application for Rescission of Judgments

The application for rescission of a judgment where the judgment debt, costs and interest have been paid, may be made in the following manner:

  • The application should be made on the prescribed form or a form which corresponds substantially with the form prescribed in the rules;
  • It must be accompanied by reasonable proof that the judgment debt, the interest and all costs have been paid;
  • It must be accompanied by proof that the application was served on the Judgment Creditor, at least 10 business days prior to the hearing;
  • The hearing may be set down for hearing on any day, but not less than 10 business days after service of the application;
  • It may be heard by a judge in chambers.

This process is very similar to what it was previously, but now it may be heard by the judge in chambers.

Impact of Section 23A

Consumer judgments will stay on a credit bureau for 5 years and Experian will remove judgment debts upon receipt of a paid-up letter from a credit provider/Judgment Creditor or upon receipt of a rescission order. This amendment will therefore have very little impact on the bureau data as Experian already removes consumer judgments after they have been paid up as provided for by the NCA.

The biggest impact is that commercial judgments can now be rescinded when they are paid up and then provided to the credit bureau to remove the commercial judgment.