Debt collectors are governed by the National Debt Collectors Act 114 of 1998. One of the most important aspects of the Act is the establishment of the Council for Debt Collectors.
The main objective of the Council is to exercise control in the manner in which debt collectors do their job.
A person who wishes to practice as a debt collector and charges fees for the work must register with the National Council for Debt Collectors.
A register of people registered as debt collectors is kept by the Council, and debt collectors are issued with a certificate of practice.
What debt collectors may not do when collecting a debt
When collecting debt, a debt collector may not use force or threaten to use force against a debtor or any other person close to the debtor. He/she may not act in an excessive or intimidating manner, he/she may not use fraudulent or misleading representation, and a debt collector may not spread false information concerning the creditworthiness of a debtor.
Should any of the above conduct by the debt collector arise, the consumer has the right to lodge a complaint with the Council for Debt Collectors – who will commence an investigation.
Should the debt collector be found in contravention of the above, he or she may risk having his or her certificate withdrawn, suspended pending a fulfillment of a condition which may be imposed on him or her by the Council, fined, or ordered by to reimburse any person who the Council is satisfied has been prejudiced by the conduct of such debt collector.
What may be recovered when collecting a debt?
It is important to know that debt collectors may only recover from the consumer the capital amount of a debt due and interest legally due and payable thereon, and also necessary expenses such as admin fees and fees prescribed by the Minister in the Government Gazette.
Is it possible to negotiate for lower installments?
If it happens that the consumer finds himself/herself in a position where he/she can no longer afford the repayment plan, the consumer may negotiate for a lower installment. It is important for consumers to urgently contact their creditors as soon the consumer realises that his/her financial position has changed. The consumer must not wait for debit orders to bounce as that will result in interests added and possible legal action taken against the consumer.
What happens if I am over-indebted? How does the law protect me?
The National Credit Regulator defines over-indebtedness as follows:
Section 79 (1) of the NCR provides that, “ a consumer is over-indebted if the preponderance of the available information at the time a re-determination is made indicates that the particular consumer will be unable to satisfy in a timely manner all the obligations under all the credit agreements to which the consumer is a party, having regard to the consumer financial means, prospects and obligation, and probable propensity to satisfy in a timely manner all the obligations under all the credit agreements to which the consumer is a party as indicated by the consumer’s history of debt repayments.”
A consumer may apply for debt counselling. This is a process whereby a debt counsellor assesses a consumer’s outstanding debt and implements a restructured debt repayment plan.
Once all the consumer’s debts have been settled under the debt review process, the consumer will be issued with the clearance certificate, which will also be sent to all credit providers and credit bureaus.
The advantage of a debt review process is that it protects the consumer from any legal action which may have resulted arising from the consumer’s debt.
But it also has its disadvantages, in that, while under a debt review programme, the consumer cannot apply for any credit until all outstanding debts have been settled.
A consumer may also wish to consolidate his/her debts. This process is called debt consolidation-it is a process where a company pays all your debts, which results in the consumer owing the company an amount equal to the total sum of all his/her debts. In effect, multiple debts are combined into a single, larger piece of debt, usually with more favorable pay-off terms; a lower interest rate, lower monthly payment, or both.
Mphaphuli Mudzunga Tshinetise Attorneys Inc. Office no 9, 2010 Centre, site no D18, Phalaphala Street Thohoyandou – 015 969 1018. Office no 0603 JSL Towers 6th floor 259 Pretoria Street – 012 397 3026
*by: Tshinetise S.J Director: Mphaphuli Mudzunga Tshinetise Attorneys Inc.
