The boundaries for debt collectors
It can be a troubling time when a debt collector is on your case. It’s a call we could all do without. Why you are being called can vary, from not paying your broadband bill to one of your creditors chasing because you’re behind on your repayments. When it comes to managing that interaction with a debt collector, Friendly Finance has listed the basic boundaries they can and can’t cross to enforce a knowledge base to help you identify any illegal practices. The National Debt Collection Act 114 of 1998 regulates the process of collecting debts in South Africa. We have outlined a summary below.
The debt collector could win
- Possible repossession if your debt is secured. A secured debt is collateralised with an asset that you own, like a property or a car.
- Debt collectors make their money from taking a percentage of the money you owe your creditor. Dependant on the amount of outstanding debt you owe, they may relent if the amount is too small to cover their costs. In the event of the latter, you will still face a black mark on your credit file, because the unrecovered debt will be reported as unpaid.
- If your debt is in the form of unsecured (not collateralised with an underlying asset). The debt collector is actually fairly restricted in terms of legal action they can take to recover the debt.
- The bigger the debt, the harder they will try to recover it. Debt collectors will pile resources into including legal action in the form of a court summons. This letter of intent will outline why you are being sued, for how much and your scheduled court date. In the outcome of the debt collector winning the lawsuit (should you not wish to settle the debt prior to a court judgment), the judge will award them a fixed amount of money. The terms of the policy will involve a range of options below:
- If the debt collector is granted permissions from the court to clip your salary, they issue an order requiring your employer to withhold a certain amount of your earnings each month for a period of time.
- Seize one or more of your assets. If they do get permission, that asset will likely be sold in a public auction and the proceeds are applied to the outstanding debt.
- Enforce a judgement lien on a particular asset in your ownership. When a lien is placed on one of your assets, you cannot sell or borrow against it unless the debt collector is paid off first. Once the debt collector is paid off, the lien can be removed.
The debt collector shouldn’t win
- A debt collector can’t call before 6 am or after 9 pm, without being authorised by the consumer. They are prohibited from calling on Sunday’s.
- They cannot repeatedly call you at all hours of the day over a short period of time. For example, they can’t call twice in the same afternoon.
- A debt collector can’t use obscenities or bad language towards you.
- Misrepresenting how much you owe.
- Falsely claiming they’re lawyers, government representatives, the police or credit reporting agencies. Additionally, calling you without telling you who they are or why they’re calling you.
- No circumstances can the debt collector try contacting your employer. Only if the debt is related to overdue child support.
- Get in touch with a relative or close friend to speak with on behalf of your debt. They are within their means to ask about your whereabouts to try and track you down, however, they can’t divulge any information as to why they need to speak with you.
- They can’t demand that you speak with them. If you have a lawyer representing you about the debt, let the debt collector know – the debt collector will then need to go through the lawyer instead.
- Try to recoup more debt than you actually owe, unless they are under contract with the creditor and it’s outlined in their agreement. This also includes trying to collect any interest, fees or additional charges.
- Depositing a post-dated check early.
- Use any language or symbol on any mail they send you.