Your phone rings and it’s an unknown number. You hesitantly answer, and a booming voice on the other end demands immediate payment for a debt you barely remember, threatening all sorts of dire legal consequences. Welcome to the often-terrifying world of debt collection. You are not alone and many South Africans experience significant stress and anxiety due to aggressive or unfair debt collection practices. However, here’s the good news: you have rights, and debt collectors aren’t above the law!
Here’s some facts to separate the reality from debt collector ramblings:
- Can they call you at any time of day or night? NO! The National Credit Act (NCA), and Consumer Protection Act (CPA), regulate how debt collectors can operate. They cannot harass you with excessive calls, call you at unreasonable hours (e.g., in the middle of the night), or at your workplace if your employer prohibits it.
- What is a debt collector threatens you with arrest or imprisonment? It would be a scare tactic and definitely illegal! Debt is a civil matter, not a criminal one. Debt collectors have no power to arrest you, given instruction to SAPS to arrest you, nor can they threaten criminal prosecution. If they do, they’re breaking the law.
- Are debt collectors allowed to contact your family, friends, or employer to disclose your debt? Generally, NO! However, they are allowed to contact these individuals to get your contact details if they can’t reach you in any other way, but that’s all. They are not allowed by law to disclose the details of your debt to third parties without your consent. Your financial privacy is protected.
- What if you don’t recognise the debt – Do you have to pay a debt collector? Not necessarily. You must always verify the debt. Ask the debt collector for a detailed statement, proof of the original agreement, and confirmation that they are legally entitled to collect the debt. They must send it to you via email. If you don’t recognise it, then it is within your right to dispute it!
- Will the debt go away if you make a small payment? Unfortunately not, but be careful because it can restart the “prescription clock.” In South Africa, most debts expire after 3 years if no payment has been made, no acknowledgement of debt (AoD) signed, and no legal action taken. If you make a payment on a prescribed debt, or acknowledge it, you might unknowingly revive it. Therefore be very careful of what you say, sign or do in relation to the debt they want to claim!
What can you do when dealing with Debt Collectors?
- Stay Calm: Yes, it might be easier said than done, don’t let intimidation tactics rattle you.
- Verify the Debt: Demand written proof of the debt and the debt collector’s authority to collect it.
- Know Your Rights: Familiarise yourself with the NCA and CPA regarding debt collection practices.
- Communicate in Writing: If you communicate with a debt collector, always do it in writing (email is good) so you have a record. Even if they phone you, don’t agree or accept anything, and ask them to send you a detailed email to verify the debt.
- Don’t Be Pressured to Pay What You Can’t Afford: If you genuinely can’t pay the full amount, try to negotiate a payment plan you can afford. Don’t agree to something unsustainable. Again, remember to not negotiate or agree to anything, before you haven’t verified the debt. Also, make sure any negotiations are done in writing.
- Seek Help from the National Credit Regulator (NCR): If you believe a debt collector is acting unfairly or illegally, you can lodge a complaint with the NCR.
- Consider Debt Counselling: If you’re overwhelmed by debt, a debt counsellor can help you restructure your finances and negotiate with creditors on your behalf.
- Get Legal Advice: If the harassment continues, if the debt is disputed, or if you’re unsure of your rights, consult a lawyer.
We once had a client who was receiving calls at 8PM from a debt collector who sounded suspiciously like he’d just consumed a few litres of energy drinks. We sent a stern letter outlining the legal implications of harassment, and the calls stopped. Sometimes, all it takes is a clear demonstration that you know your rights.
The information herein should not be seen as a quick fix to run away from your debt, but rather it is intended to inform you of the appropriate debt collection practices that must be followed and your rights in such processes.
Takeaway: Debt can be stressful, but you don’t have to tolerate illegal or unfair debt collection practices. Educate yourself, stand firm, and don’t hesitate to seek assistance from the NCR or a lawyer. Your peace of mind is worth protecting.
