Cape Town - This is one link in the chain of debt that few people consider. But there are people whose job it is to find debtors, to chase up unpaid debts, to facilitate communication between debtors and creditors, and to assist the attorneys to whom desperate creditors have turned.
It’s not a job most people would want to do – but in the world of finance it is an essential one. Below are the questions Fin24 posed to a couple working in Johannesburg as debt collectors. For professional reasons they choose not to be named.
How did you become involved in the world of debt collecting?
I have been involved since 1999 in debt collection. My husband was a credit manager and saw the business opportunities in this industry. We then became involved as a team.
What does a typical working day look like for you?
These days all cases are electronically downloaded from the system of the attorneys. It has to be kept up to date, and there has to be regular feedback on progress. We also confirm home or work addresses of the debtors. Only then can you go to the debtors to try and collect. We work mostly for attorneys, who specialise in debt collection for their clients.
Have you seen any significant difference in the debt patterns of consumers in the last year or two?
Yes, definitely. Most of the work we get is to try and recover short-term loans on which people have defaulted. It would appear to be caused partly by the ever-rising cost of living.
What do you think are the main reasons why people fall behind in their debt repayments?
The vicious circle of borrowing money, and then having to pay it back with interest. Then another loan is applied for to keep one’s head above water. There are also people who live very far beyond their means, and then they simply cannot keep up with their financial obligations. Another reason is the high rate of unemployment. Sometimes there is only one person working in an entire household, who ends up having to look after everybody. Rising cost of living also definitely plays a role, as does substance abuse of some kind.
As in the case of traffic cops or dentists, few people can be happy to see you. How do you handle this?
Most people are very negative when you arrive, but we are actually there to help. We take a look at income and expenditure and usually the debtor can make an arrangement for the payment of a lower installment – obviously within reason. You also find those people who make it very clear from the word go that they are not at all prepared to negotiate, and who are then sent a summons by the attorney.
What is the most difficult situation with which you have ever been faced?
Threatening and intoxicated debtors. Or, even worse, a serious domestic dispute when either the wife or the husband was completely unaware of the fact that the other party made the debt in the first place.
The illegal lending industry is huge in South Africa. They cannot make use of people like you, who service the legal lending industry. Do they do their own debt collections? Any idea whether the stories one hears of their bully boy tactics when collecting their debts could be true?
We suspect they are true. But we have never been contacted by any illegal lenders. We have heard many stories though of people whose property has been confiscated illegally, but we don’t have any knowledge of physical violence being used.
In your experience, do South Africans go into debt to buy luxuries, or to survive, or a bit of both?
A bit of both.
Do you think credit is granted too easily to people who cannot afford it?
There is no question about it. We see this all the time.
Do people ever ask your advice on what to do about their debts? What do you recommend?
Most often, our advice is to talk to the institutions to whom they owe the money. It is never a good idea to just keep quiet. If you cannot afford the full installment, try and pay something, so that they can see you are prepared to pay. In the final notices we issue, there is also a clause that make it clear to them that they have the option to go and see a debt counsellor.