The idiom, “never throw good money after bad” comes to mind when a creditor considers litigation proceedings against a debtor. Before committing resources to recover debt, the creditor should always consider whether the debtor has the necessary funds to repay the judgement debt. For the most part, attorneys for creditors can negotiate repayment terms, but in some cases the court must be approached for a more strenuous means of recovery in the form of a judgement.
Once judgement is granted, the next step in the litigation process is the execution phase. This is where the order granted by the court needs to be executed to recover the debt owed to the creditor. The execution process can sometimes be a frustrating process as some debtors have brilliant evasion tactics which make it difficult for the creditor to attach their assets and recover the judgment debt.
South African Law has a variety of mechanisms available to creditors to recover the judgement debt from a judgment debtor, such as for the attachment of movable or immovable assets; attachment of a bank account; garnishee order; Section 65 financial enquiries; liquidation, or sequestration proceedings. Once judgment is granted against the debtor, a warrant of execution is issued by the Court, providing details of the judgment, including the amount and any interest. Most of a debtors’ movable goods will be eligible for attachment, such as furniture, vehicles, cash or banknotes, cheques, bills of exchange, promissory notes, bonds, securities for money belonging to the execution debtor and cash held in the bank.
Attaching of bank accounts is one of the most efficient tools in the execution of a judgement. These proceedings, if done correctly, will ensure that the judgement debtors’ bank account is frozen and the monies in the bank account are then paid over to the judgement creditor. It is vital that this process be carried out in accordance with the relevant rules of the Magistrate Court or High Court as there could be serious repercussions for the judgement creditor if the procedure is not followed correctly. For instance, the judgement debtor may bring an urgent application which would involve more legal costs for the judgement creditor.
Whenever a Sheriff attaches the bank account of a debtor, the bank account is frozen and the monies in the account will be paid over to the creditor – in some cases, even future deposits. For instance, in a 2018 judgment, Oscar Nite (Pty) Ltd v The Standard Bank of South Africa Ltd (4867/2017), it was determined that the attachment of a bank account would extend to future or accruing debts, thus making it possible for the creditor to also attach any forthcoming payments made into the relevant bank account. To attach the bank accounts of a debtor the Sherriff must have the bank account’s details. One way of obtaining the banking details of a debtor is to have your FICA documents in place in accordance with the Act, especially with rental agreements, and to make provision for the other party’s banking details to be completed when signing an agreement.
By Eloise Cilliers | Associate | Barnard Inc.
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