Sections 57 & 58 of the Magistrates’ Court Act 32 of 1944

COLLECTION OF A DEBT THROUGH AGREEMENT

  1. INTRODUCTION

A common misconception amongst the public is that the collection of debt from a slow paying and/or defaulting debtor shall necessarily result in exorbitant legal costs coupled with an arduous and lengthy trial.

Whilst the aforementioned does indeed hold true for certain cases, the Magistrates’ Court Act does offer relief in certain instances.

The purpose of this article is to explore two of the mentioned remedies to be found in Section 57 and Section 58 of the said Act.

  1. SECTION 57 OF THE MAGISTRATES’ COURT ACT

Section 57 finds application where the debtor admits liability to the creditor by doing the following once the former has received a formal letter of demand and/or a summons and acts as follows:

  1. Admits liability to the creditor for the amount of the debt and costs claimed in the letter of demand or summons or for any other amount;
  1.  Offers to pay the amount of the debt and costs for which he admits liability, in instalments or otherwise;
  1. Undertakes on payment of any instalment in terms of his offer to pay the collection fees for which the creditor is liable in respect of the recovery of such instalment; and
  1. Agrees that in the event of his failure to carry out the terms of his offer the creditor shall, without notice to the debtor, be entitled to apply for judgment for the amount of the outstanding balance of the debt for which he admits liability, with costs, and for an order of court for payment of the judgment debt and costs in instalments or otherwise in accordance with his offer.

The creditor, or his duly appointed attorney, may accept such an offer by sending a registered letter, setting out the acceptance and terms of acceptance, to the debtor.

Should the debtor fail to comply with the terms of the settlement proposal, the creditor may apply to court, without further notice to the debtor, for judgment of the outstanding amount. The judgment granted shall be tantamount to and have the effect of a default judgment.

If the debtor was not present in court for the judgment, the creditor, or his duly appointed attorney, must advise the debtor of the judgment and order by registered post.

 

The creditor may then proceed to execute the judgment by attaching the debtor’s movable property in quietus of the debt.

The mentioned section is a prime of example of how engaging with a debtor beforehand may eschew costly litigation. The aforementioned process is simplistic and cost effective for the aggrieved creditor.

  1. SECTION 58 OF THEMAGISTRATES’ COURT ACT

Section 58 operates closely with Section 57. The pertinent difference between the mentioned sections lies in that Section 58 makes provision for a debtor to acknowledge the amount claimed and to consent to judgment to be taken against him for the claimed amounts.

 

Once the debtor has consented to judgment, the creditor may at anytime through his own volition, or through the auspices of his legal representative, apply to court for an order for the judgment amount or, if the debtor referred to instalment amounts to be paid, an order setting out that the instalment amounts be paid.

If the debtor was not present in court for the judgment, the creditor, or his duly appointed attorney, must advise the debtor of the judgment and order by registered post.

The creditor may then proceed to execute the judgment by attaching the debtor’s movable property in quietus of the loan.

Consents to Judgement are usually undersigned by a debtor who wishes to engage the creditor with respect to the settlement of the matter and wishes to provide the creditor with security should the former party default.

  1. CONCLUSION

The mentioned sections are good examples of wisely engaging in settlement negotiations whilst not forgoing legal remedies available.

Contact one of our competent attorneys for advice on how to collect outstanding amounts in the most cost effective and expedient manner.

For more information or to schedule a consultation kindly contact:

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