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Debt Collections

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Debt Collections

Every Business, Closed Corporation and Sole Proprietorship has a goal; that is to make the economy better and whilst doing this to make enough money to sustain itself in such a way that they can continue in the future.

When a business is selling a product (fruit or veg) or alternatively selling a service (professional services) the intention is to sell either the product or a service for remuneration. Generally, when it comes to products the consumer shall buy a product and pay immediately, alternatively they will be invoiced and expected to pay by a certain date (this is the same for services).

What happens when the Client or the Consumer fails to pay their account?

Debt Collection can go one of two legal ways.  The person to whom the debt is owed either writes the debt off and forgets about it; or alternatively, they pursue it by way of instituting proceedings.

When the debtor defaults on his payments and fails to adhere to any agreement the person to whom the debt is owed may approach a firm, who is willing to assist in proceeding with debt collection by way of instituting legal proceedings.

Before we go into the legal proceedings, we will first look at the nature of the claim and the outstanding amount together with where the action arose in order to determine the jurisdiction of the Courts (also taken into consideration must be the terms and conditions consented to a specific Court).

A District Magistrates Court has the jurisdiction to hear matters up to R 200 000.00 and the Regional Courts may hear matters up to R 400 000.00 (this is determined by the Minister from time to time and published in the Government Gazette). Anything above R 400 000.00 will have to be heard by the High Court of South Africa.

Once we have determined the outstanding amount and the Jurisdiction of which Court to approach, we will need to determine the outstanding amount and whether or not the amount due and owing arose from a contract (Written or Oral).

The first step of Debt Collection is to call the Debtor and demand the money back.

Should the first step not work, a letter of demand must be drafted and sent to the Debtor. This would have to be in terms of the Magistrates Court Act alternatively the Superior Courts Act. Should the National Credit Act be applicable (as this plays a big part in your collection, and should your business be considered acting in terms of the National Credit Act), in this letter you will inform the Debtor of the default or his lack of adhering to an agreement whereby the Debt is satisfied by the Debtor by paying the amount due and owing, and demand that they pay the amount on a specific time (in terms of the National Credit Act)

Should the time period lapse and your Debtor has not satisfied the outstanding amount which is due and owing, you will now have to proceed with a Summons. In this day and age a simple summons will only be a better option should you be doing collections of over 100 matters; as it is a lot more simple and less time consuming to do it together with a Particulars of Claim, this Summons is called a Combined Summons.

The Summons will have to comply with the all the Rules of the Magistrates Court alternatively the rules of the High Courts; in which you would have to set out the facts and set out the nature of the claim and where the action arose, state the full amount and what it is for, and how much is outstanding.

The Summons then is issued at Court with a file number and said Summons will be sent to the Sheriff to be served.

Once the Summons has been served the Debtor (now known as the Defendant) will have ten (10) days to defend the Summons. This will determine whether or not this matter will be unopposed (undefended) or opposed.

If the matter is undefended:

The next procedure will be to wait for the ten (10) days to lapse and apply for Default Judgment.

Default Judgment means that a person (the Defendant) has failed to respond to the Summons in the time period which was given. This is a process whereby the Plaintiff applies to the Court to have the Judgment, in terms of what has been pleaded in their Summons, granted against the Defendant.

Once this has happened and you have a Default Judgment the next procedure is to collect the outstanding amount. In order to do this you will have to draft a Warrant of Execution also known as a Writ of Execution. This instructs a Sheriff to go out to the Defendant’s property and attach and remove the Defendant’s movable assets.

The Sheriff will then lock the assets away and you will have to advertise in two local newspapers that an Auction will be held. Once this has been advertised the Sheriff will auction off the movables to the public in order to recover the outstanding money.

Defended Actions will follow normal litigation procedures.

Should your business need assistance in the debt collection processes we at Martin Vermaak are happy to assist in all your debt collection needs. Book a consultation with our Offices and receive a more in-depth discussion on the debt collection process.


Bradley Cullingworth


Candidate Attorney

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