Section 127 of the National Credit Act gives the consumer an extraordinary right, namely to rid themselves of their credit agreement when goods are involved, by unilaterally deciding to return the goods to the credit provider so that they can be sold by the credit provider in order for the agreement amount to be settled.

This right and procedure relates only to instalment agreements, secured loans and leases as defined in the NCA.

The process in terms of the section 127 procedure can be broken down as follows:

1. Written notice by the consumer that they wish to surrender the goods;
2. Surrender of the goods by the consumer;
3. Notice by the credit provider of their estimated value of the goods
4. The right of the consumer to withdraw from the voluntary surrender (limited to consumers who are not in default of their credit agreement);
5. The sale of the goods by the credit provider;
6. Written notice by the credit provider to the consumer detailing the sale price of the goods and whether or not there is any debit or credit amount due or owing in terms of the agreement;
7. Payment by the credit provider in the event that there is an amount owing to the consumer, alternatively if there is an amount due by the consumer to the credit provider — the right to take legal action after the Notice referred to in 6;
8. The right of the consumer to challenge the sale price released if they feel the price was not satisfactory.

However, the credit provider can use the provisions of this section to regain possession of the goods, if the consumer is willing to co-operate and voluntarily surrender the goods in terms of this section when prompted to do so by the credit provider.

Bentley Attorneys will drafted the necessary documentation to enable credit providers to comply with the provisions of section 127 and legally obtain the voluntary surrender of goods where the consumer is agreeable.