Debt collection: know your rights
Millions of South Africans are over-indebted and struggle to pay their bills each month.
“It seems that South Africans have become more dependent on making debt to fund their lifestyles, says Chantel Cronje, legal advisor at Legal and Tax.
According to Cronje, one merely needs to consider the extent to which the demand for personal loans has skyrocketed after banks tightened their lending practices after the 2008 credit crunch.
As a result many South Africans are on the edge of insolvency.
“Although many choose to avoid talking about their financial crises, what they cannot avoid is the haunted reality of debt collection,” said Cronje.
“This is a process many South Africans might have experienced and will still experience, but sadly, most still remain ignorant as to how it works and what their rights are.”
The National Debt Collection Act 114 of 1998 regulates the process of collecting debts in South Africa.
Debt Collection is when an attorney; a person who is an agent of an attorney; or a registered debt collector collects, on behalf of the credit provider, the outstanding amount plus lawful interest, admin costs and collection fees, which by law is capped to certain amounts.
If a debt collector charges for his/her services, they must be registered with the Debt Collectors Council and they are not allowed to:
- Use force or threaten to use force against the consumer or their family
- Physically threaten the consumer or their family
- Give, or threaten to give information to the consumer’s employer that may affect their opportunities as an employee
- Serve any false legal documents
- Present themselves as police officers, sheriffs or officers of the court
- Spread, or threaten to spread any false information about the consumer’s credit worthiness
- Charge more than the tariff of fees which is set down by the Council
It is important to know exactly what the role of the debt collector is.
They are tasked with the job of collecting the money and usually have no interest in your circumstances.
It’s simple; your account has been handed over to them to take steps to recover the money you owe the credit provider.
They get paid a percentage of the amount collected while charging service fees for doing so.
Therefore it is important to first verify any claims made by debt collectors.
For claims about consumer finance, including personal loans, credit cards and store cards, you have a legal right to a statement of the amount owed and how it is calculated.
If debt collectors refuse to send you copies of loan documents or statements for an alleged debt, you have the right to complain to the Debt Collectors Council, in which case you can go to www.debtcol-council.co.za.
You are also entitled to refuse to pay anything until they give you details in writing and supporting documents to their claim.
Always remember that you should not sign an admission of liability or consent to judgment or to an emoluments attachment or garnishee order.
One of the biggest mistakes consumers make is waiting until the last moment before starting the communication process.
Consumers should rather be transparent with their creditors from the moment they sense a crisis is on the way.
With the right approach at the right time, more affordable payment plans can be arranged.
In this regard consumers should be encouraged to consider debt counselling which in turn can assist with debt restructuring and re-negotiating instalments and interest rates.
Avoid blacklisting
To avoid getting blacklisted, you should not avoid unpaid bills with your creditors.
Instead, if you are unable to make a payment on your account for the month, rather than let the debit order bounce, or not paying your account at all, make contact with the creditor.
Communication and transparency can avoid a blacklisting.
Explain what’s happening to your creditors, and make sensible and affordable arrangements to try and achieve an up to date account.
When you make contact with your creditor and explain a serious situation to them, most of the time they will be willing to help you handle an emergency.
This is especially the case if your account is generally in good standing and they can see that this is the exception.
On the other hand, leaving the situation by ignoring phone calls and messages from your creditors is not the way to go if you want to avoid getting blacklisted and losing a healthy credit score.
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