In today’s society, almost everyone has debt. Whether it’s car finance, store accounts, mortgages, personal loans, credit cards etc. It’s almost impossible to survive without it. And with pay increases not keeping pace with real inflation (not talking about the CPI concocted by government to make the government look good – but which bears little relation to the true living cost increase), we’re becoming more and more indebted EVEN while we lower our living standards as well.
At some stage, most people will have problems with unethical debt collectors. Even those who usually pay their debt right on time can be harassed. Ever closed a paid up store account anywhere? You could find that that paid-up Milady’s account that you closed 12 years ago - can come back and suddenly the debt collectors tell you that you owe them thousands!
So how do you know that you’re dealing with an unethical debt collector? Here are some warning signs to look out for:
- They try and collect on prescribed debt – i.e. No payment or promise of payment has been made by you in the past 3 years, but they try and trick you into acknowledging the debt any way they can. What you have to remember is that if you DO make payment on prescribed debt, that the prescription FALLS AWAY. This means that the prescribed debt is NOT LONGER prescribed and can be collected on again.
- They come and harass and intimidate you in person either at your home, or at your workplace. Usually they try and intimidate you into signing acknowledgement of debt documents as well as debit order authorisations. They FREQUENTLY do this on prescribed debt!
- They load illegal trace alerts on your credit record. Especially for debts that prescribed years ago. Even if they have your current contact details! The fact is – it’s illegal to load a trace alert on someone’s credit profile, if the contact details on the credit profile is current and correct OR if the debt has prescribed.
- They remove illegal trace alerts when contacted – only to put the illegal trace alerts back on your credit profile 3 months later for the same debt!
- They continually threaten legal action – e.g. telling you that they’re going to get a judgment against you if you don’t pay – BUT – they never actually institute legal action. They’re content to continue harassing people and adding legal ‘fees’ to the account as long as they can charge for sms notifications and phone calls.
- They ignore the in-duplum rule. The in duplum rule means that the total amount outstanding on a debt can NEVER be more than double the amount that was outstanding when the account fell into arrears. E.g. You get a loan for R1000. You repay R100 per month, but after 2 payments you no longer make payments. Out of the R100 repayment, R20 was interest on the loan, while R80 was paid against the capital amount. So by the third month (the time when you fall into arrears), you’ve paid R160 off the R1000 capital amount – so you still owe R840. Two years later you’re able to start paying off this debt again. The MAXIMUM possible outstanding balance after two years of non-payment is R1680! This means that if the debt collectors tell you that the outstanding balance after two years is more than R1680, they’re definitely being unethical. They can still add interest and legal fees after every payment – back up to the R1680 limit BUT if you can save up the R1680 and repay the debt in one payment – they CANNOT charge you more!
- They try and get garnishee orders against you – without getting default judgment against you for the debt first! The fact is – they can only load a garnishee order against your salary if they got a judgment against you within the 3 years before the debt prescribed. Even then – you have to sign PERMISSION for this garnishee order. If you haven’t signed for the garnishee order – IT’S ILLEGAL. The unethical debt collectors fraudulently sign the forms themselves and then try and garnish your salary. If you have any garnishee orders against your salary, ensure that YOU signed the permission – otherwise you can have the garnishee order cancelled legally.
- Do not sign ANY document unless you’ve READ the document, UNDERSTAND what’s in it AND AGREE with what it says. If you ever read a document, but cannot understand it because they use technical legal language – DON’T SIGN IT! Find someone who can understand it and get them to explain it to you BEFORE you sign (and don’t trust the debt collector to explain it to you – they WILL lie or exclude important information just to get you to sign). If you don’t agree with what the documents say – DON’T SIGN IT – even if you’ve read it and understand it! Many would say that this is common sense, but unfortunately common sense isn’t so common anymore...
So what can we do when we’re being harassed? It doesn’t help to complain to the debt collectors council – the National Credit Regulator (NCR) has withdrawn their approval of the codes of conduct that apply to debt counsellors and debt collectors – i.e they’ve closed down one avenue of legal recourse. So now there are two options left. The first involves instituting civil suit to claim damages and costs as a result of illegal and unethical behaviour, but this costs money and if you’re already over-indebted, chances are you won’t have the money to do this. The second option costs nothing and involves lodging a complaint with the Law Society (this is specific to debt collectors who’re also a legal firm). You just need to fill out the prescribed complaint form (you can find it on the Law Society of the Northern provinces website, the Cape Law society webpage or the Kwa-zulu Natal law society websites – depending on where the legal firm is located). Then have the complaint form certified (at any police station, post office etc.) before faxing the complaint to the correct fax number. The Law societies police their members MUCH more stringently than the now defunct Debt Collectors Council – so your complaints have a much better chance of being resolved.
I would like to urge every single person, who’ve had a nasty tangle with unethical debt collectors (I won't name names, just check on HelloPeter), to PLEASE lodge a complaint with the relevant law society. We’ll never get debt collectors to act ethically and legally if we don’t! Complaints on HelloPeter might bring quick relief, BUT the debt collectors just wait 3 months and then start trying their luck again on the same debt. We have to stop this nasty circle...