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THE DEBT COLLECTIONS PROCESS – COMPILED BY NFC ATTORNEYS INC.

1. LETTER OF DEMAND

The letter of demand sets out the cause of action on which the demand is based, and will give the other party time to comply with the demand.


2. SUMMONS

The issue and service of a summons commences the trial action. The purpose of the summons is to bring the Plaintiff’s cause of action and the claim made.  The summons informs the Defendant that it has 20 business days within which to deliver a Notice of Intention to defend the action and that failure to give notice within the prescribed time will allow the Plaintiff to apply for Default Judgment against it.


The Particulars of claim, which is attached to a Combined Summons, outlines the nature of a Plaintiff’s claim and the amount claimed from the Defendant.  The Particulars of claim will set out a description of the parties to the action, the background to the dispute, and will ensure that the claim and all the facts upon which the claim is based are fully outlined.  The particulars of claim must contain sufficient detail to enable the Defendant to defend the allegations made against him and must include a copy of any written agreement that is relied upon.


Once the Summons is issued by the court, the summons is sent to the appropriate sheriff with instructions to serve the summons on the Defendant at his residence or place of business.  Once the Sheriff has served the Summons, he will complete a return of service to indicate that service was successful.  A Defendant is only deemed to have received the Summons when the Summons has been properly served by the Sheriff.


3. DEFAULT JUDGMENT

A Plaintiff may apply for Default Judgment where a Defendant has failed to serve a Notice of Intention to Defend within the prescribed time or where the Defendant has failed to deliver its Plea after receiving a Notice of Bar from the Plaintiff.  Where the prescribed time lapses, the Plaintiff is entitled, without further Notice to the Defendant, to apply for final Judgment against the Defendant. Where Default Judgment is granted, the Plaintiff is able to demand compliance with the Judgment.


Where the Defendant was not aware of Service of the Summons, it is possible for the Defendant, on learning of the Judgment against him, to apply for a rescission of Judgment.  This application is supported by an Affidavit which must provide a satisfactory explanation for the Defendant’s failure to give notice of Intention to Defend and explaining the nature of the defence that will be raised.

Summary Judgment:-  Summary Judgment can be sought in certain circumstances when an action is defended.  It is a remedy which is pursued by a Plaintiff seeking speedy Judgment at an early stage without the delay and expense of a trial.  An Application for Summary Judgment must be served within 15 days of the delivery of Notice of Intention to Defend.  In most instances the Plaintiff will be granted summary judgment where the Defendant has no bona fide defence and has entered in appearance to defend solely for the purposes of delaying the action.


4. EXECUTION


Where a party has been ordered to pay a sum of money and he fails to do so, then the other party will be entitled to execute against his property.  Execution is the process in terms of which the Judgment debtor’s property is attached by the Sheriff and sold by public auction in order to raise funds to satisfy the Judgment.  Property which may be attached can be movable, immovable or incorporeal (e.g. share certificates or rights of action).  However, execution will take place first against the movables and thereafter against any immovable property.


If the Judgment debtor does not have sufficient executable property, then another means of collecting the money owed will need to be relied on.  Since in this instance the Judgment debtor is technically insolvent, the Judgment creditor may wish to apply for the sequestration of the judgment debtor’s estate (where the debtor is an individual), or apply for the winding-up of the Judgment debtor (where the debtor is a company).  In Execution of a Judgment, the following occurs:

A writ of execution is issued by the Registrar of the court.  This is a document ordering the sheriff to attach the necessary property of the Judgment debtor.  

The Sheriff will then serve the writ on the Judgment debtor at his home of place of business.

The Sheriff will then request satisfaction of the debt.  Sometimes the Judgment debtor will at this point pay the amount owed as well as the costs incurred in obtaining the writ.  If this happens then the attachment of his property is no longer necessary.

If the writ is not satisfied, the Sheriff will ask the Judgment debtor to point out movable property to be attached.  The Sheriff should attach sufficient property to satisfy the Judgment and costs.

The Sheriff will then prepare an inventory listing the items which have been attached.  This will then be given to the attorney who may, at that stage or thereafter, instruct the Sheriff to take the items listed in the Inventory into his custody and sell them.

The Sheriff will then sell the Judgment debtor’s property by public auction until an amount has been raised that will satisfy the Judgment and costs.  This is done after due advertisement in suitable newspapers.


5. EMOLUMENTS ATTACHMENT ORDER


An emoluments attachment order in is a court order whereby he Judgment creditor is able to attach part of the salary or wages of the Judgement Debtor.  Once an emoluments attachment order has been granted, the employer of the Judgment debtor (who is referred to as the garnishee) is obliged (on a continuing basis, and until such time as the Judgment debt has been paid in full) to pay a certain portion of the Judgment debtor’s salary or wages to the Judgment creditor.