Can banks seize personal assets?

[rietrot]

It doesn't even have to be 110% bond.

If you fail to make any arrangement or sell the house and it eventually goes on auction the bank will get way less most likely and will hold you responsible for whatever balance.

They'll likely have you sign a admission of debt and continue to collect from you, not confiscate other assets, but they can.


10 point thing above seems mostly correct.

 

[Messugga]

None of which imply the bank has any right to ownership of the property (assuming all payments are made on time).

Absolutely. I wasn's disagreeing with you, just expanding.

 

[Andrew001]

Thanks for all these explanations. If I've pieced it all together correctly, it goes like this. I've numbered the paragraphs because I'd appreciate it if anyone could please point out any parts I've got wrong. Thanks.

1. A debtor who sees that he/she's about to struggle to make the bond repayments can avoid a lot of trouble by contacting the bank of their own accord, and then possibly be granted some leeway, to pay a lower monthy sum, at least for a while. That could prevent the whole matter of any property being repossessed or seized.

2. Once the bank has decided they have a debtor (who was trying to be a home-owner, but has failed) who is continuing in default of the bond repayments, they will try to encourage that debtor to cut their losses and sell before things get messy. If the debtor refuses, the bank will blacklisted that debtor, and will appeal to the Court asking for permission to repossess. "Repossess" means that Court orders that the bank (which effectively owns the property anyway) is granted permission to sell it, without the cooperation or permission of the debtor. The bank's journey through the Court system takes 6 to 12 months.

3. During this time, the debtor will stay in the property, without honouring the agreement. They'll be rent free, mortgage "free", but racking up more and more debt).

4. Is the Court order ever not granted in the bank's favour? Are there conditions which prevent the Court from granting an order to the bank to repossess,?

5. The bank then tries to sell the property directly (they're allowed to try this, too, right?) and/or puts the property up for auction.

6. For as long as the property doesn't sell, does the debtor still remain in the property, still not paying, and ever increasing the debt? Or could the debtor pay in something? Does the bank go for eviction, as well, or make vacating the property part of the sale, or even leave that nightmare up to the new owner?

7. Depending on the mortage amount still outstanding, the selling price could end up being be the same, or more, or less than the remaining part of the mortgage owed to the bank. Whatever the price, it goes to cover first the fees and costs of the lawyer, the Court, the registrations, agents, auctioneer, etc. and second to settle as much as possible of the mortgage (including the months during which the debtor did not pay the installments, and incurred yet more interest-debt for that lateness). The remaining sum, if positive, would belong to the ex-owner (and that would be the end of it all). If negative, that sum would be owed by failed home-owner to the bank.

8. At that point, the debtor could voluntarily sell off everything else, to try to pay off as much as possible of the debt. Or, if the debtor is able make a repayment schedule, a lower one, more realistic than the bond they weren't managing to pay, could they get out of debt? And if so, then be rehabilitated and taken off the blacklist? Or is that likely/unlikely in real life?

9. In the absence of any willingness on the debtor's part to sell and settle of their own accord, the bank could then go to Court again, (another 6 to 12 months?) to get permission to send the Sheriff to seize whatever is left, and sell it off to pay towards, once again, first the costs of the lawyer, and of the Court and Sheriff, and only then the remainder towards the debt.

10. What happens after the debtors possessions have been sold and they have nothing more to offer the bank? Can the bank have part of their salary docked? Or register a claim on future income such as possible inheritance or lottery gains? What else can the bank do? Or, if the bank has sold the debt to a debt-collecter, what else can they do?

Great questions. Especially number 10.
Its quite crazy how we don't know how this stuff works. This should be manditory info /education, especially disclosed by the banks.

 

[Pho3nix]

Thanks for all these explanations. If I've pieced it all together correctly, it goes like this. I've numbered the paragraphs because I'd appreciate it if anyone could please point out any parts I've got wrong. Thanks.

1. A debtor who sees that he/she's about to struggle to make the bond repayments can avoid a lot of trouble by contacting the bank of their own accord, and then possibly be granted some leeway, to pay a lower monthy sum, at least for a while. That could prevent the whole matter of any property being repossessed or seized.

2. Once the bank has decided they have a debtor (who was trying to be a home-owner, but has failed) who is continuing in default of the bond repayments, they will try to encourage that debtor to cut their losses and sell before things get messy. If the debtor refuses, the bank will blacklisted that debtor, and will appeal to the Court asking for permission to repossess. "Repossess" means that Court orders that the bank (which effectively owns the property anyway) is granted permission to sell it, without the cooperation or permission of the debtor. The bank's journey through the Court system takes 6 to 12 months.

3. During this time, the debtor will stay in the property, without honouring the agreement. They'll be rent free, mortgage "free", but racking up more and more debt).

4. Is the Court order ever not granted in the bank's favour? Are there conditions which prevent the Court from granting an order to the bank to repossess,?

5. The bank then tries to sell the property directly (they're allowed to try this, too, right?) and/or puts the property up for auction.

6. For as long as the property doesn't sell, does the debtor still remain in the property, still not paying, and ever increasing the debt? Or could the debtor pay in something? Does the bank go for eviction, as well, or make vacating the property part of the sale, or even leave that nightmare up to the new owner?

7. Depending on the mortage amount still outstanding, the selling price could end up being be the same, or more, or less than the remaining part of the mortgage owed to the bank. Whatever the price, it goes to cover first the fees and costs of the lawyer, the Court, the registrations, agents, auctioneer, etc. and second to settle as much as possible of the mortgage (including the months during which the debtor did not pay the installments, and incurred yet more interest-debt for that lateness). The remaining sum, if positive, would belong to the ex-owner (and that would be the end of it all). If negative, that sum would be owed by failed home-owner to the bank.

8. At that point, the debtor could voluntarily sell off everything else, to try to pay off as much as possible of the debt. Or, if the debtor is able make a repayment schedule, a lower one, more realistic than the bond they weren't managing to pay, could they get out of debt? And if so, then be rehabilitated and taken off the blacklist? Or is that likely/unlikely in real life?

9. In the absence of any willingness on the debtor's part to sell and settle of their own accord, the bank could then go to Court again, (another 6 to 12 months?) to get permission to send the Sheriff to seize whatever is left, and sell it off to pay towards, once again, first the costs of the lawyer, and of the Court and Sheriff, and only then the remainder towards the debt.

10. What happens after the debtors possessions have been sold and they have nothing more to offer the bank? Can the bank have part of their salary docked? Or register a claim on future income such as possible inheritance or lottery gains? What else can the bank do? Or, if the bank has sold the debt to a debt-collecter, what else can they do?

4. Yes but then the bank goes back to rework their requests. Remember they have more money than you.
5. They usually put it on Auction, no direct sales
6. It's in their best interests rather to vacate the premises but a sepearate order would be needed to evict them.
7. Costs go first to pay off the house. Any extra to settle legal fees. If there isn't any extra you pay for the legal fee's + interest AND the remaining bond + interest.
8. The debtor would need to contact the bank for a payment arrangement or go under debt counselling.
9. Yes but again, for the principle debt first and then legal fees etc after.
10. Bank usually sells to debt-collector OR will claim from estate. No claims to salaries after the "Set Off" process was outlawed in 2019(?)

 

[Gozado]

Wow, thank you very, very much to everyone! It's becoming easier to understand.

Just to be clear: I am fortunate not to be in this situation, but I agree with @Andrewbll that this should be mandatory education: all the stages of how to buy a property, and what could go wrong and how to prevent losing it, if at all possible, and the stages of losing it by force, and how to sell a property.

 

[Gozado]

If you fail to make any arrangement or sell the house and it eventually goes on auction the bank will get way less most likely and will hold you responsible for whatever balance.

This may not always be true, I'd think. I think it would depend how much of the home-loan was still owed to the bank.

To illustrate with small numbers: Let's say the property was bought for 100, and the monthly repayments have been made faithfully for 15 years, during which time the remaining sum owed to the bank has been reduced to 45. The owner/debtor can no longer manage the monthly repayments and, let's say, is also too sick to cope with making the sale themselves so the bank puts the property on auction. Fortunately, the house is now valued at 140 and is auctioned for 120.

Then I think the sum would look something like this:
Buyer paid 100. First slice goes to pay the outstanding amount on the mortgage 45, next slice to pay bank's costs and legal fees 30, which leaves 120-45-30 = 45 to be paid out to the seller, who will then be clear of debt and out of the whole mess (but will have to take serious decisions about where to live!).

In an example such as you are giving, that would mean, say:
Property bought for 100, remaining sum owed 95.
Selling price 120.
120-95-30 = -5 still owed by the debtor to the bank (while having to try to find a place to rent, with a bad credit-rating).

And this would be correspondingly worse if it had been a 110% bond.

 

[chrisc]

If you are married out of Community of Property, you can move assets to your wife. Failing that your children

A friend in Constantia who had a gambling problem and could see the bank and creditors coming transferred 2 cars and his holiday house in Hermanus to my wife. She subsequently got a letter of demand from FNBs attorneys and ignored it. Nothing happened. They were just doing their job they told her

Within a year he was rehabilitated and transferred it back. The legal fees, duty, etc was over R220k so must have been worth it. He certainly got a bad fright

The house he was living in was rented. He owed several banks well over R1500k. The cars had been paid for

 

[Gozado]

They only know how much it will be once the property is sold. It could go to auction and go for nothing.... or not sell.
Only once the asset is sold will they know what the debt is.

Does this mean that the bank cannot ask for :
a) repossession (= the right to sell) and also
b) costs, and seizing assets to cover them, "such as those costs will turn out to be", in this matter only?

I do understand that the bank doesn't know exactly what the debt is until after the property is sold. And yet, as soon as they begin the process, they do know that if there is a debt remaining once the propery it sold, they will have a claim on the debtor for it. And they also know that they're within their rights to claim for their costs, too. The Court knows this, too.

Is a double request to the Court for a) and b) not permitted only because the actual amount is not known? Does this, alone, exclude making the claim, even when the whole story is clear? Or is there another reason?

 

[Andrew001]

If you are married out of Community of Property, you can move assets to your wife. Failing that your children

A friend in Constantia who had a gambling problem and could see the bank and creditors coming transferred 2 cars and his holiday house in Hermanus to my wife. She subsequently got a letter of demand from FNBs attorneys and ignored it. Nothing happened. They were just doing their job they told her

Within a year he was rehabilitated and transferred it back. The legal fees, duty, etc was over R220k so must have been worth it. He certainly got a bad fright

The house he was living in was rented. He owed several banks well over R1500k. The cars had been paid for

Wow interesting storey and work around.
Did the banks not come chasing once his assets were transferred back?

 

[Smokey mcpot]

If you are married out of Community of Property, you can move assets to your wife. Failing that your children

A friend in Constantia who had a gambling problem and could see the bank and creditors coming transferred 2 cars and his holiday house in Hermanus to my wife. She subsequently got a letter of demand from FNBs attorneys and ignored it. Nothing happened. They were just doing their job they told her

Within a year he was rehabilitated and transferred it back. The legal fees, duty, etc was over R220k so must have been worth it. He certainly got a bad fright

The house he was living in was rented. He owed several banks well over R1500k. The cars had been paid for

This happens often especially with business owners.
I remember back pre 2000 people used to run scams and then go "bankrupt" with everything in the wifes name. My dad used to lose alot of money because people doing this. Owner of business buys 1mil supplies on credit and would sell at a profit and make 3mil. Doesnt pay the 1mil bill and pay around 100k claiming they're bankrupt. Everything gets sold/repossessed and the 2.9mil, cars, houses etc all in the wifes name. They got blacklisted for 3 years (could be 5, cant remember) and once blacklisting is completed they opened another cc and repeated the process.
This was also the reason alot of guys started getting thugs to do their debt collecting when the legal route failed them.

On the flip side, I also know of one business man who had transferred everything onto his wifes name... everything to the tune of over 40mil. The wife divorced him and got off with every cent. He was lucky he had one of the houses on his name it else he would not have had a roof over his head.