Answer to a question from a reader

Nedbank is putting my house on auction although I still pay them through a debt review court order. What can I do?

The short answer

The debt review payments protect you from having your house repossessed. If you miss even one payment, the debt review ends.

The whole question

I am currently paying Nedbank through a debt review court order but they are putting my house on auction. What can I do to stop this?

The long answer

The debt review payments are supposed to protect you against having your house repossessed and sold by the bank. But if you miss even one debt review payment, the debt review is ended. 

What then happens is that either a Section 86(10) notice is sent to your Debt Councillor, the National Credit Regulator and yourself, or the bank sends a letter and a summons to you in terms of Section 88. 

If the bank sends a letter and a summons to you, it’s important to go to court and defend the matter, and ask the court to allow you to continue making payments under the debt restructuring court order. 

Since 2017, the laws have been amended to insist that the judge must take into consideration the fact that the house is your primary residence and to see if another way of settling your debt can be agreed with the bank, rather than selling your house.

But if the bank has already obtained a court order allowing them to sell your house at auction on 22 October, it seems you have missed the opportunity to defend the matter in court.

Perhaps the only thing you can do now is to contact your Debt Councillor and ask how it could happen that your house is to be auctioned when you are still making payments under the debt review court order. 

You should also find out if the judge made an order that the house cannot be sold for less than its value, so that you can at least recover some money after the outstanding debts have been paid. 

Since the changes to the law in 2017, the bank now has to give evidence of the market value of the property and the amount that is still owing, when it goes to court to apply for home repossession. This should help, in theory, to see that the house isn’t sold off at a ridiculously low price, as happened very often before 2017. The selling of a house at auction is now considered to be the last resort. 

If the sale has to go ahead, the money will be used to pay the outstanding debt on the loan and the bank’s costs. The bank will pay you what is left over. 

You can’t be evicted from a house sold on auction before the property has been legally transferred to a new owner.

You could also contact the Debt Counselling Community Support and ask if there is something they can do to assist:

Email: [email protected]

Answered on Oct. 21, 2020, 1 p.m.

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Please note. We are not lawyers or financial advisors. We do our best to make the answers accurate, but we cannot accept any legal liability if there are errors.