More than 10 million South Africans are over-indebted and struggling to repay their monthly bills. This has more often than not led to financial institutions using the services of debt collection agencies to recover debts.
To avoid the debt collection process, consumers should be transparent with their creditors when they sense a crisis is coming along.
What is debt collection?
Debt collection is when an attorney, a person who is an agent of an attorney or a registered debt collector collects, on behalf of the credit provider, an outstanding amount plus lawful interest, admin costs and collection fees, which by law is capped to certain amounts.
How debt collection for individuals works:
As an individual, it’s important to know your rights. Debt collector cannot use force or threaten to use force against you or your family. These individuals cannot physically threaten you or your family and they cannot serve you any false legal documents.
Keep in mind that debt collectors are tasked with collecting money and usually have no interest in your circumstances. Only registered debt collectors (with the Council for Debt Collectors) can collect debts.
You have the right to refuse to pay anything until the collector has given you details in writing and supporting documents to the claim.
You can also report any unethical behaviour to the Council for Debt Collectors which is obliged to investigate any charge.
Every business has its share of slow paying and non-paying customers. As a business owner, cash flow is often the lifeline to your business operations, so you need to keep track of cash that is owed to you. Once you’ve identified these customers, you need to take action.
It may make better sense to hire a debt collection agency, as handling difficult debtors requires patience, skill and perseverance.
You need to make sure that you contact the right person, stay firm, professional and focused. Ask questions to find the real reasons for customers not paying the debt. Report the debtor to credit rating agencies. Litigation should be the last resort.