When consumers fall behind in paying their creditors (“Judgment Creditors”), creditors may obtain a court order against the debtor (“Judgment Debtor”). The court order will include the outstanding capital due, interest and legal fees/costs, as determined by a competent court.
The Superior Courts Act, 2013, was amended by the insertion of Section 23A, which came into effect on 11 March 2019. This amendment brings about alignment with the National Credit Act by allowing rescission of judgments where the judgment debt, interest and costs have been paid up. It also makes provision for rescission of a judgment debt with the consent of the Judgment Creditor without having to show good cause.
The amendment was drafted in 2014 to ensure a more consumer friendly approach to rescission applications, which previously proved to be very expensive and time-consuming.
The Application for Rescission of Judgments
The application for rescission of a judgment where the judgment debt, costs and interest have been paid, may be made in the following manner:
- The application should be made on the prescribed form or a form which corresponds substantially with the form prescribed in the rules;
- It must be accompanied by reasonable proof that the judgment debt, the interest and all costs have been paid;
- It must be accompanied by proof that the application was served on the Judgment Creditor, at least 10 business days prior to the hearing;
- The hearing may be set down for hearing on any day, but not less than 10 business days after service of the application;
- It may be heard by a judge in chambers.
This process is very similar to what it was previously, but now it may be heard by the judge in chambers.
Impact of Section 23A
Consumer judgments will stay on a credit bureau for 5 years and Compuscan will remove judgment debts upon receipt of a paid-up letter from a credit provider/Judgment Creditor or upon receipt of a rescission order. This amendment will therefore have very little impact on the bureau data as Compuscan already removes consumer judgments after they have been paid up as provided for by the NCA.
The biggest impact is that commercial judgments can now be rescinded when they are paid up and then provided to the credit bureau to remove the commercial judgment.