August 1, 2023

Car repossession rules while under debt review

Car repossession

If you have no experience with how debt review works, you probably want to know what the car repossession rules may be. For example, will your car be safe? Does being under debt review mean giving your vehicle back to your creditors?

We know it can be intimidating when all you want to do is protect your assets. Keep reading, and you’ll find the answers you need.

Car repossession laws in South Africa

For many over-indebted people, applying for debt review is scary. Without knowing the rules, you may assume you’ll lose your assets and have to turn over your most valuable possessions to your creditors.

The great news is that the exact opposite happens thanks to the National Credit Act (NCA). The South African government created the National Credit Act to protect the assets of those who need help clearing their debt while under debt review. Thanks to the laws in place, assets are completely covered. This means repossession of your car while under debt review is illegal.

While under debt review, a counsellor will communicate with your creditors and ensure that your repayments are manageable. Here at Debtline, our counsellors will work to cut down your interest rates and the amount you need to pay each month. The aim is to get you debt-free as quickly as possible while protecting your assets and maintaining your monthly needs.

When can a car be repossessed in South Africa?

Unfortunately, there are instances where debt review cannot protect your assets, and your creditors may repossess your car. While this is not the ideal outcome, specific processes are in place that function outside of what debt review can protect.

  • Protection under debt review does not apply when:
  • You’ve received a Section 129 Letter of Demand more than ten days prior.
  • A summons is served relating to your car (or house mortgage).
  • You’ve missed a payment and your debt review lapses.
  • Creditors have already claimed your vehicle.

In these cases, you will need to go through the legal channels available, as being under debt review is no longer an option. We recommend a Credit Law Specialist like VDL Attorneys if you need legal assistance.

Can you get a car while on debt review?

One of the most important rules to remember is that when you are under debt review, you can not obtain any more debt. This means that a legal and trusted credit provider may not offer or give you more debt than you already have, including financing a vehicle.

While other options are available, such as buying a car in cash or using a lend-to-own service, it’s best to pay off your current debt first. Even small extra payments towards your debt counselling total can make a big difference in the long run.

Want to know more? Let Debtline help you navigate the world of debt review and being debt free.