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‘With more than 10 million South Africans over-indebted and struggling to repay their monthly bills, it seems that we have become more dependent on using debt to fund their lifestyles.
Although many choose to avoid talking about their financial crises, they can’t avoid the reality of debt collection. 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,’ says Chantel.
Defining debt collection
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, an outstanding amount plus lawful interest, admin costs and collection fees, which by law is capped to certain amounts.
If a debt collector charges for their services, they must be registered with the Debt Collectors Council. A debt collector is not allowed to:
- Use force or threaten to use force against you or your family
- Physically threaten you or your 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 your credit worthiness
- Charge more than the fees set down by the Council
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What is the role of the debt collector?
It is important to know exactly what the role of the debt collector is. They are tasked with collecting money and usually have no interest in your circumstances. It’s simple; your account has been handed over to them to recover the money you owe the credit provider. They are 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 was calculated. If a debt collector refuses to send you copies of loan documents or statements for an alleged debt, you have the right to complain to the Debt Collectors Council. 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 judgement, 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 can assist with debt restructuring and re-negotiating instalments and interest rates.
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Tips to avoid blacklisting
- To avoid getting blacklisted, you should not avoid unpaid bills with your creditors. Instead, if you are unable to make a payment, rather than let a debit order bounce, or not pay your account at all, make contact with the creditor.
- Communication and transparency can prevent 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 it’s an 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.
- Should you already have fallen into the vicious cycle of having been blacklisted, Legal & Tax can help. (Phone: 0860 LTS LTS (587 587) or email [email protected]).
For more useful tips and advice follow @LegalandTax on Twitter.