Here's comes the seasonal blizzard of summonses from the banks - how to defend yourself

This is the season to be jolly, but in January and February the hangover sets in. This is when people run into financial difficulties and the banks start issuing summonses for recovery of debts. If you are in arrears on your mortgage bond, now is the time to prepare yourself.

This is when people run into financial difficulties and the banks issue a blizzard of summonses to execute on homes that are in default.

So now is the time to set your affairs in order.

If you are falling into arrears with your mortgage bond, immediately do the following:

1. Work out your income and expenditure in order of priority;
2. Divide your creditors into A-Creditors (these are you most important creditors such as your bond, vehicle instalment or your mother-in-law) and B-Creditor (Unaffordable) debt; 
3. Pay only A-Creditors until your money runs out; 
4. Stop paying B-Creditors and build up a savings fund to help you pay A-Creditors in the future. The courts will support you making provision for future monthly necessary expenses in this way.
5. If you are still falling behind with your bond and you can't bring your arrears up to date then, unless you can increase your income or further prioritise your A-Creditors, it looks like you will probably be facing bond foreclosure proceedings by your bank.

There are 3 things you can do if your bank forecloses on your bond:

• Let the bank proceed to auction sale. This is a forced sale and it you would probably be better off using the banks' Help U sell programmes which will allow you to get a better price for your property than on public auction. 
• Sell the property on the retail market; this is an even better option, as you can sell at market price, hopefully getting an even better price (thereby maximising your return and minimising any possible shortfall to the bank). You will have about six months to sell your property from receipt of the Section 129 letter (which is the notice banks are obliged to send out to inform borrowers that they are in default, and that they must get up to date on their arrears or face legal action). For most people, once you receive the Section 129 (of the National Credit Act) notification, you must decide whether or not you are going to defend the matter.
• As I have written in the previous articles – always defend, as our experience is that there are usually grounds to defend the matter. Why? Because banks are sloppy and issue cut and paste summonses that are procedurally incorrect and, just as importantly, contain errors of account.

To understand how these attacks by the bank can be defended, read the articles posted on Acts Online about Greg Smith and Adrian Hart. These cases were won because the banks were sloppy and tried – as they generally do – to take a chance with the courts. It is getting more difficult for the banks to get summary judgment against clients, particularly where they cannot show the original bank documents allegedly signed by the client.

Defending the action by the bank will buy you time to get out of a financial hole.

Remember, if you defend the summons, you avoid getting a default judgement against your public credit record.

But if you decide you do not want the stress of fighting with the bank and want to get your arrears up to date, then this is obviously the best thing to do.

You reinstate the bond by bringing the arrears up to date. You can reinstate the bond at any time up to transfer of the property in accordance with the Nkata judgment (Nkata v Firstrand Bank Limited and Others (CCT73/15) [2016] ZACC).

If you decide you want to defend, then here is the template you should use at DIYDefence. 

In subsequent articles I will present two different types of defence:
1.    Where the bank cannot produce the original loan documents (extremely common, and much abused by the banks)
2.    Securitisation (yes, there is a way to defend against securitisation as I will point out in an upcoming article).