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Abbygail Glass
 
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Avoiding Attorneys' fees!

18 March 2014, 10:23
Recently an article was submitted regarding debt collecting call centres. Whilst the article was very informative, some of the comments, and people’s lack of knowledge regarding the whole debt collecting process, was shocking. I received the following comment (on one of my comments to offer instalments) : Bad advice. Never, never, never, never ever admit any liability ever, ever. Offering to settle or pay instalments is an admission of liability. Here is a wakeup call, you can’t deny liability for debt that you made, with the exception of prescription (please read Kurt Ellis’ article regarding prescription http://www.news24.com/MyNews24/Debt-Collectors-The-Truth-20140313) – NEVER accept or offer to pay prescribed debt. Should you deny liability, you will be handed over to Attorneys and your debt will grow like it’s on steroids. The process of debt collection is as follows – you first receive notice in terms of Section 129 of the National Credit Act.

Take note that Attorneys need only to prove that the notice was sent, proof that you received it is not necessary in some courts. Should you not reply to this notice, Summons will be issued. Once again, no proof is required that you actually received the Summons, only that it was served, be it via attachment to your gate, or service upon anybody (not a minor though) present in your house. That means that you don’t have to sign for anything! Once again, should you not reply to this Summons, Judgement will be granted against you, meaning that this bad debt is listed against your name, ultimately it means blacklisting and your credit name goes to sh*t.

You will receive notice that judgment was granted against you in some cases, but should you be employed the next route will more than likely be a garnishee order. The reason for my article is to try and inform people of the legal costs involved (I worked for my uncle during holidays, and yes he is a Lawyer – he also assisted me with this article). I have seen debt go from R2 000.00 to R20 000.00 just due to legal fees.

Attorney’s fees are debited according to guide lines, but there is no limit to the amount of fees they may charge (to simplify - say a letter is charged at R68.00, they may not charge R96.00, but they may write 100 letters). Collection commission (10% plus VAT) is also charged with every single payment received by Attorneys. Just because they accepted the instruction from their client, they are entitled to a fee. Interest is charged at 15.5% (which might be way more than the institution owed).

Financial providers need to follow certain guide lines in terms of the National Credit Act (like obtaining your monthly income and expenditures, and assessing affordability) when granting credit, so please make sure that they followed these guide line before following my advice. If only the general public could have a taste of debt collecting.

So here is my advice (and please note that is regarding debt that you know you owe) :

1. When you receive notice, that you have been handed over, immediately contact the institution owed (not the attorney) and offer instalments to them. If you go through the attorney, there will be fees. Unfortunately some companies refuse to deal with you, once you have been handed over, and arrangements with the Attorney isn’t optional.

2. Should you have to deal with the attorney, contact them and arrange for payment. Signing a consent at the Attorney (which most attorneys prefer when you offer instalments) usually means that you consent to judgment and a garnishee when defaulting in payment. Try avoid signing this document, and offer your own written confirmation of payment (only state that you offer to pay a certain amount on a certain date – and that is it). Just to clarify, they will proceed with further legal steps if you default, so try not to.

3. Try to make payment every single month. If you are unable to make payment in a specific month, send them an email stating that you will pay the following month (they might still proceed with further steps, but the letter will help) , or try to pay even the smallest amount.

4. Reply to any legal documentation as soon as possible. The sooner you respond, the less your legal costs. Some people are also under the impression that no legal action can be taken if any form of payment is made, even if it’s just R2.00. This is not the case! You will be called to court, and your financial position will be assessed. The court will then make an order of what they deem reasonable. Should you be in a position where a garnishee order has already be granted against you, try and make extra payments to settle the debt earlier. Please people, you can avoid legal fees, if you just reply to legal documents (again, ensure that you are liable before admitting or offering payment).

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