When you enter into a credit agreement there are certain expectations from both parties. You expect to benefit from a particular service or product and you are expected to repay your debt on time.
If you are unable to pay your debts on time, the best thing to do is to contact your creditors and bring attention to your current situation. Failing this, you might find yourself receiving calls and further correspondence from your creditors who want to collect funds due to them.
If you ignore creditors’ letters and phone calls or you fail to make payments to settle your bill, it will be most likely be turned over to a collection agency. Your delinquency will also be reported to credit bureaus. This is usually within 3 to 6 months after you default.
Research has shown that the most common types of debts that people default on are credit cards, cell phone bills and medical bills. Companies resort to various ways to recover costs and the debt recovery process may include using the services of a debt collector.
By law, a debt collector should always try to consult with a debtor in order to negotiate an acceptable arrangement as to when the overdue amount will be paid. When this method doesn’t work, further action can be taken, such as garnishee orders, sequestration etc.
Amendments to the National Credit Act mean that if a consumer had not acknowledged a debt for more than three consecutive years either verbally or in writing the debt was considered prescribed and had effectively lapsed. Unfortunately, in recent years, a portion of the 10 million South Africans in debt have found themselves on the receiving end of abuse meted out by unscrupulous debt collectors who’ve prey on those who aren’t clued up about how debt recovery works.
How to spot unethical debt recovery agents:
- They try and collect prescribed debt
- They harass and intimidate you
- They load illegal trace alerts on your credit record
- They continually threaten legal action- but never follow through