Cash doctor

2014-02-11 08:00

When you are told to watch your debt, you probably think about your credit cards and personal loans.

But if you fail to pay a doctor’s bill on time, he can hand you over to a law firm, at which point the costs start escalating sharply.

When Sipho Madonsela’s medical aid didn’t pay the full bill charged by his doctor, he wasn’t able to pay the difference immediately. When he failed to make the payment within three months, the account was handed over to a lawyer with an outstanding amount of R1?600.

“I immediately paid R1?000 and promised to pay the rest the following month. But there was a strike at work and I was unable to pay in time,” he says.

In Sipho’s mind, he now only owed R600. He then received an email informing him that the amount due was R3?200 in cash and, failing payment, the creditor would attach goods at his home.

Under the National Credit Act, medical bills and even school fees fall under “incidental credit agreements”. This applies to bills that are not paid on time and under the act, the people you owe money to are allowed to charge you 2% interest per month on the outstanding amount.

In addition, if your account is “handed over”, you are then liable for debt-collection fees. The Debt Collectors Act states that a registered debt collector may charge you a fee, which is equal to the capital amount of your debt or R814, whichever is lower.

You are also liable for commission of 10% of each instalment paid, to a maximum of R407 per instalment.

Bear in mind that if your account has been handed over to a firm of attorneys rather than a debt collector, these fee restrictions do not apply.

Fast facts

Breakdown of the charges and fees

A debt collector can only charge you a fee equal to your capital debt or R814, whichever is lower. If you receive a detailed statement, you can expect to see the following items:

»?R17 for every fax, email, letter or registered letter of demand (excluding registration costs).

»?R17 for every necessary phone call that is not a consultation. This is basically every phone call made to you to demand payment.

»?R2.20 for every electronic communication (other than fax or email) – up to 10 a month.

»?R17 for other “necessary expenses” not specifically provided for.

»?R166 for serving you with documents at home or work to obtain your signature on an acknowledgment of debt.

»?R11 for a necessary registered credit bureau search (with a maximum of four a month).

»?R33 for drawing up and furnishing you with a settlement account, which shows the fees.

»?R8 for correspondence received and attended to. This refers to correspondence received from you.

»?R41 for necessary consultations with you.

»?R65 for “attending taxation”.

If you challenge the fees or interest on your account, the account goes to the taxing master in a magistrates’ court, who makes the final decision on whether the fees raised are necessary and in line with the law.

It is important to note that although R814 is the maximum that you can be charged for debt-collection fees, you will also be liable for ongoing commission until your debt is paid.

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