If you owe debts, the truth is that legally they can be handed over as soon as 20 working dates after the expense is incurred. So if you think you not be able to make a payment, your first port of call is to try to make a payment arrangement with the company you owe money to.
Most companies will gladly accommodate a payment plan of up to three months. If you have, however, already missed a couple of payments, a debt collector or attorney may start to contact you. This means your debt has been handed over and your case is now sitting with a third party. From there, you will start receiving some stressful smses, emails and phone calls explaining how your debt is urgent and the fees are mounting up.
So what are your rights when debt collectors start banging on the door?
The first step is to determine whether your debt has been handed over to an attorney or a debt collector, because you will need to lodge any complaints with different bodies. Advocate Andries Cornelius CE of the Council of Debt Collectors explains that debt collectors are not attorneys but that some attorneys earn income by doing debt collecting.
You would be better off being pursued by a debt collector because there is no set cap on what fees attorneys can charge you and then you will have to take complaints directly to the law society. Debt collectors, on the other hand, can charge you no more than R814 in debt collection fees.
On the assumption that you are being pursued by a debt collector, these are the steps to take.
“If they are not registered (with the Council of Debt Collectors) then it’s a criminal act to collect debt,” Cornelius says. “Don’t sign anything until you've had some legal advice. By law you are not obliged to
sign anything unless it’s from the Sheriff of the court or the police,” he adds.
Get a credit report from the credit bureaux (your first one that you apply for every year is usually free) and find out if the debt has been attached to your name and if it is impacting on your credit score. If it's not listed then the debt collector will have a case to prove. The debt collector will have to prove that the debt exists and by proving it they will have to find the original contracts,” points out Ian Wason, CE of debt counselling firm DebtBusters.
“The general rule is that debt will prescribe after three years but you may still have to go to court to argue that the debt has been prescribed,” explains Cornelius. Cornelius points out that using the prescription act cannot be used as a defense in all instances.
Draw up a budget and list your expenses (such as school fees, your grocery bill and water and electricity rates that you pay every month), income and your other debt obligations and explain to the debt counsellor what you can afford to pay. “You can also negotiate for a discount. Debt collectors do have a lot of leeway when it comes to the books of business that they have bought,” says Wason.
If the debt collectors do any of the following, you can report them to the Council for Debt Collectors via writing:
Debt review provides protection to the consumer from the credit providers who harass them or threatened to repossess their assets. More specifically, section 86 of the national credit act 34 of 2005 regulates the debt counselling industry. Therefore, it also allows less flexibility for the consumer, as well as more official protection from creditors.