Your rights when debt collectors hound you

By Staff Writer
Do you get that sinking feeling in the pit of your stomach when you see an unregistered number appearing on your cell phone? If you have missed a couple of payments or are bad at managing your debt chances are you may be in line for stern phone calls, messages and letters from companies that you owe money to. They may have even pass on your debt to a debt collection agency to collect the money owed. 

But what should you do if you are called by a debt collector? What if they ask you to sign documents or are trying to get you to acknowledge your debt. Are you under obligation to sign any documents you are presented with? What if your debt collector is rude or harasses you? Do you have any rights?

Here is what you can do:

Find out if the debt collector is registered
There are a lot of con artists out there eager to get hold of your money. First find out if the person you are dealing with is a true professional. “First ask the debt collector whether he or she is registered with the Council for Debt Collectors and to provide proof. If they are not registered then it’s a criminal act to collect debt,” says Advocate Andries Cornelius, CEO, of the Council for Debt Collectors.

Don’t sign until you understand the contents
If you are presented with a document to be signed by the debt collector tell that person that you will  not sign it until you have obtained legal advice.

Even if they persist, don’t be pressured into signing any documents there and then. “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 Sherriff of the court or the police,” says Cornelius.

Find out if the debt exists
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. “Go to the credit bureaus and get your free credit report. See if your debt has been listed on there. 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, CEO of debt counselling firm DebtBusters.

Find out if the debt is prescribed
“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 defence in all instances. If you have revolving credit, a home loan or if your debt account is active you cannot refer to the loan as prescribed. 

Unless an account has been closed and nobody has contacted you about the outstanding amount for over three years then the loan cannot be prescribed. 

Be careful what you agree to sign for. If you acknowledg the debt either verbally or in writing then the debt can no longer be prescribed. 

Are they over charging you?
Unless your debt collector is a lawyer a debt collector may not charge you more than R814 in debt collection fees. However, you will also be liable for commission of 10% of each instalment paid, to a maximum of R407 per instalment. 

Always ask for a full statement. Then find out if you’ve been overcharged in interest and fees on your loan. Wason points out that it’s not uncommon for lenders to charge you more than the legally prescribed in duplum rule, which states that lenders may not charge you more than double your loan amount at the time of default in interest charges and fees. “So when you stop paying your credit card and there was R3,000 on it the most they can charge you in penalties and fees is R6,000,” says Wason.

Pay what you owe
If the debt is not prescribed and you owe the money then you are unfortunately liable to repay that loan. Try and see if you are able to negotiate with the debt collector or agency. 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. 

Stand up to bullies
If the debt collector is rude or harasses you, you can report them to the Council for Debt Collectors. The Council has powers to investigate the matter and can act by closing down the company or imposing hefty fines if they find that the debt collector in question has gone against their code. 

"Debt collectors are not allowed to harass you, embarrass you, contact your family members about your debt or to threaten you about going to jail for example. If what a debt collector is doing to you sounds unfair then chances are it’s not within the code of conduct," says Cornelius. 

For more about how to complain to the Council for Debt Collectors by clicking here. 

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