Joe was diagnosed with heart disease and had to reduce his working hours, with the resultant effect that his monthly income decreased. As a result, Joe tried to negotiate with his bank to try and save the house he had bought just a few years ago, the said house having been purchased in terms of a credit agreement, concluded with a bank. However, the property was subsequently auctioned by the bank and the auction price did not cover the outstanding debt due to the bank.
Joe knows that reasonably he could have expected a shortfall on the bond after it was auctioned. He wanted to do the right thing and pay the shortfall. However, his efforts to determine the details of the shortfall were in vain as the bank in question failed to provide this information. Hence, Joe was shocked when three months after the property was auctioned, he found an account listed on his credit report, that he did not open. He did not recognise the account number. The account listing was in respect of the property that had been auctioned by the bank. When he made further enquiries with the bank, he was advised that the account listing is a ‘debt recovery account’ in respect of the shortfall that arose when the property was auctioned. Further, the shortfall amount appeared to be the same amount as the initial bond amount.
In terms of our law, namely the National Credit Act 34 of 2005, the ‘debt recovery account’ listing on Joe’s credit reports can simply be removed on the basis that Joe did in fact not open the said account. The onus would then be on the bank to prove otherwise.
Regarding the shortfall amount and the extent of Joe’s liability regarding same, Joe would be entitled to the following information, in terms of section 131, read with section 127(5)(b) of the National Credit Act 34 of 2005:
1. The settlement value of the agreement immediately before the sale;
2. The gross amount realised on the sale;
3. The net proceeds of the sale after deducting the credit provider’s permitted default charges and,
4. The amount credited or debited to the consumer’s account.
Any credit provider that sells property, as a result of the consumer’s financial inability to honour the repayment obligations in terms of a credit agreement, or where the property is sold by the credit provider pursuant to the consumer’s voluntary surrender of the property, must provide the consumer with the abovementioned detail and information. This enables the consumer to determine whether the property was sold as soon as practicable for the best price reasonably obtainable.
Further, where this information is not provided or the information provided indicates that the property may not have been sold for the best price, reasonably obtainable, the consumer can may apply to the National Consumer Tribunal to review the disputed sale. If the National Consumer Tribunal is not satisfied that the credit provider sold the goods as soon as reasonably practicable or for the best price reasonably obtainable, the National Consumer Tribunal can order that the credit provider pays the consumer an additional amount exceeding the net proceeds of the sale.