If a consumer is no longer able to pay for the item they purchased from you, Section 127 of the National Credit Act allows a consumer to surrender the goods to the credit provider to resell in order to assist the consumer by relieving the debt.
The credit provider is required by law to send two notifications to the consumer. Here is an outline of the process and when those notifications need to be sent:
Firstly, the consumer notifies you in writing that they wish to voluntarily surrender their goods.
Once the goods are surrendered, the first notification1 needs to be sent by the credit provider within 10 business days. This notification should set out the estimated value of the goods and any other prescribed information.
After receiving the first notification, the consumer has a right to withdraw from voluntary surrender within 10 business days and resume possession of the good (if the consumer is not in default of the credit agreement).
If a consumer doesn’t exercise the right to resume possession, the credit provider can then sell the goods. A second notification2 must be sent to the consumer which includes:
- The settlement value of the agreement before the sale
- The net proceeds of the sale after deducting the credit provider’s permitted default charges
- The amount credited/debited to the consumers account
- The outstanding amount (if any) after selling the goods
The consumer may challenge the sale price should they feel it was unsatisfactory. Post sale of the goods the settlement requirements are detailed in Section (6) to (10).
For more information, click here to view the NCA
National Credit Act Surrender of Goods Notifications
1 National Credit Act, 2005 Section 127 (2)
Within 10 business days after the later of-
(a) receiving a notice in terms of subsection (l)
(b)(i); or (b) receiving goods tendered in terms of subsection (l)(b)(ii),
a credit provider must give the consumer written notice setting out the estimated value of the goods and any other prescribed information.
2 National Credit Act, 2005 Section 127 (5) b)
give the consumer a written notice stating the following:
(i) The settlement value of the agreement immediately before the sale;
(ii) the gross amount realised on the sale;
(iii) the net proceeds of the sale after deducting the credit provider’s permitted default charges, if applicable, and reasonable costs allowed under paragraph (a); and
(iv) the amount credited or debited to the consumer’s account.