Creditors ordered to engage meaningfully with debtors before taking drastic action

When financial hardship strikes, responsible debt recovery becomes essential in maintaining fairness between creditors and consumers.  

The National Credit Act, 2005 sets clear guidelines to ensure vehicle repossessions are conducted lawfully and ethically, requiring creditors to engage meaningfully with debtors before taking drastic action. 

Yet, in many cases, lenders impose rigid repayment demands without considering individual financial circumstances, ultimately favouring repossession over resolution. The Western Cape High Court’s ruling has emphasised that credit providers must prioritise fairness and consumer rights in repossession disputes. 

On 30 May 2025, Judge DM Thulare ruled against FFS Finance, trading as Ford Credit, in a significant default judgment concerning the repossession of a motor vehicle. The case centred on the balance between creditor rights and the protections afforded to consumers under the Act. 

Judge Thulare dismissed the credit provider’s application for the repossession of a 2015 Ford Ranger belonging to the respondent. At the heart of the judgment was the applicant’s failure to consider viable payment arrangements that could have allowed the respondent to rectify the arrears on his account.  

The court found that while Ford had complied with procedural requirements under the Act, it had not adequately engaged with the respondent or explored flexible payment solutions that would align with his financial circumstances. 

The case arose after FFS Finance alleged that the respondent had defaulted on his monthly instalments and subsequently sought the vehicle’s repossession following a series of formal notifications. Despite the procedural compliance with the Act, the court highlighted a critical imbalance in power between creditors and consumers. The law is designed not only to protect creditors but also to uphold the rights of debtors, ensuring fair treatment amid financial distress, the court stated.  

How vehicle repossessions should be handled

According to the Act, creditors must notify consumers of defaults and offer alternative dispute resolution options before embarking on legal proceedings. In this instance, Judge Thulare noted a lack of genuine engagement from FFS Finance in response to the respondent’s efforts to reach a payment arrangement, which, according to the judge, “reflected the power imbalance” typical of such cases. 

The court pointed out that the creditor’s approach of insisting on a lump-sum payment without considering the respondent’s financial capabilities could be seen as coercion rather than collaboration. Judge Thulare emphasised that the Act aims to foster an environment where consumers can negotiate and resolve payment issues without immediate recourse to litigation. 

In conclusion, the court dismissed the application for repossession, reflecting a strong stance on protecting consumer rights in South Africa’s credit market.  

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