When you are not able to pay one of your debts it is very stressful. Sometimes it is unfortunately unavoidable but it’s important to understand what happens when you fall behind on your obligations

Fortunately, most credit providers won’t drag you straight to court for one missed payment. But if nothing is done, the process can quickly become more serious.

Here’s what you need to know:

Step 1: The First Missed Payment

When you miss a payment, your credit provider will try to contact you. This might be through messages, emails, or phone calls. At first, the goal is to remind you and get you back on track. If you catch up then things go back to normal.

If you still can’t pay, your account may be sent to the collections department. This can be a team inside the company or an outside company that handles collections for them. Their job is to contact you and try to collect the money. At this stage, it’s still possible to make a payment arrangement directly with them. Their job is to get you to pay.

Step 2: Things Move to Legal

If you don’t respond or continue missing payments, the matter may next be handed over to attorneys or the legal team. That’s when you might receive a letter called a Section 129 letter. This letter is not a court order, but it is a serious legal warning. It says that you are behind on your payments and gives you a chance to fix the situation before legal action is taken. Normally this is the final step before the credit provider is going to head to court.

Step 3: Options

The Section 129 letter is a final warning, but it also gives you an opportunity to act.

You can contact the credit provider and try to make a new payment arrangement. You can also speak to an NCR registered debt counsellor.

A debt counsellor can look at your full situation and help you apply for debt review if you qualify. This can stop legal action and help you pay back what you owe in a more affordable way.

You have a very limited time period to take these actions, so be quick or the credit providers will head to court and then things get complicated.

Step 4: When Things Go to Court

If you ignore the Section 129 letter, the credit provider will likely take the matter to court.

They will ask a magistrate to grant a judgment against you. This is a legal order that says you owe the money. Once granted, the judgment appears on your credit record and can stay there for up to 30 years if you don’t pay it off.

Most of the time the credit providers legal bill is also added to your debt since this is what you agreed to in your original contract with them.

Step 5: What Happens After a Judgment

Once a judgment is in place, the credit provider can collect the money in different ways over the next 30 years.

They can in some cases apply for a garnishee order [properly called an emoluments attachment] which takes money directly from your salary each month or they can ask the sheriff to sell some of your non-essential belongings to cover the debt.

If you have an asset that was financed by them such as a house or a car, they can ask the court to allow them to auction off the asset. If that happens any money that comes in on the auction will be put against the debt you owe and anything that is still owing can be collected from you over the next 30 years.

These legal steps can bring more stress and extra legal costs.

It’s Not Too Late

Missing a payment doesn’t mean it’s too late. But the longer you wait, the fewer options you have. If you’ve received a Section 129 letter or are struggling to pay, speak to your credit provider or a registered debt counsellor as soon as possible.

Getting help early can make all the difference.