“On your marks, get set, run!?"

03 August 2020 ,  Allan Lesesa 136

Probably this is what comes first to many debtors’ minds when they get that dreadful call from attorneys telling them that their account has been handed over for debt collection– they just want to run away!

But since you are already in debt, does running from them help you in anyway? What should you do when your account gets handed over for debt collection?

We understand that the economic odds do not always favour us, as such, we do now and then get hit with some tough economic challenges that result with us not being able to discharge our debts– this can happen to anyone at any point in time, but the thing is: whether I can or cannot pay my debts is really not a show stopper, as such life goes on and that means our creditors are entitled and may demand their credit. Often, creditors will first try to give us an opportunity to recourse, but ultimately, when their demands fall on deaf ears, they hand over to debt collectors, hence that dreadful call, but should we runaway any longer? Well to be frank, running from paying our debts only makes things worse for us.

Consider this historic development and the current legal position of our Credit laws.

Our current laws are a legal inheritance stemming from the early Roman and Dutch law– Roman-Dutch law, our common law. Initially, this law provided that should a debtor be unable to honour her debts, her creditor(s) were empowered to seize and sell her into slavery.

The process was as follows:

They shall have the right to compromise, and unless they make a compromise, the debtors shall be held in bonds for thirty days [prison]. During these days they shall be brought to the Praetor into meeting place on three successive market days, and the amount for which they have been judged liable shall be declared publicly. Moreover, on the third market day they shall suffer capital punishment or shall be delivered for sale abroad, across the Tiber River. On the third market day, the creditors shall cut shares. If they have cut more or less than their share it shall be without prejudice.

Things were very harsh for people in financial distress back then. But from that time, also considering our constitutional influence, a lot has changed, and things are easier and more bearable, the current law seeks to strike a balance between both the creditor and the distressed debtor.

The most important reason for the National Credit Act is to protect consumers by promoting equity in the credit market through balancing the rights and responsibilities of creditor providers. This position is also mirrored by the Debt Collectors Act which introduced a Council for Debt Collectors and provides for the regulation and control of debt collector’s activities. It is further coupled by the Magistrates Court Act which ensures that every debt claim is made transparent before the court of law.

The law has in some respect, ameliorated the position of defaulting debtors, thus, both sides are offered some legal advantage and safeguards. These laws keep the debt collectors from harassing the debtor or engaging in otherwise similar behaviours. Therefore, when faced with a burdening debt, running away from paying them is not a good idea. When a person runs away from paying their debts, they in a way dig the hole they are in much deeper because Section 57(1)(c) of the Magistrates Court Act and 102 of the National Credit Act allows for the recovery of debt collector’s fees, attorneys’ collection commission as well as the capital interest, so, running away may actually just result with the debtor having to pay more than they had to. I have personally seen debts as little as R300,00 accumulate capital interest and collection fees to be a couple hundreds more, simply because the debtor resorted to running instead of trying to settle the debt in an amicable manner. This calls to mind the saying that: ‘you can run but you cannot hide’– that is simply to say, even if you as a debtor run from debt collectors, with every call or SMS that you ignore, interest and collection fees will continue accruing on your debt, so, do not run– But what should you do when your account has been handed over for debt collection?

  • 1-Talk To Them: You may be surprised how humanely understanding they are, associated with talking, the law requires debt collectors to outline the original amount of the debt as well as any fees added to your account, so you may ask for a statement– Communication and transparency can save you a great deal.
  • 2-Negotiate the Terms: If you can immediately pay off the debt, do so for your own sake. But if you are not in a position to pay it off, discuss and try to offer some reasonable amount that you can afford, perhaps on a monthly basis, remember, the sooner you finish paying, theless you will have to pay considering the interest and fees, so, the sooner the better!
  • 3-If you are already on the run, seek help: We recommend that you approach us for expertise on this matter, we can negotiate on your behalf, or even circumstantially rescind any default judgements against you.

This goes to creditors as well, our soft and stringent collection approaches have proved useful and satisfactory for many creditors, so, feel free to call on us for debt recovery related services, as seasoned athletes– We know how to run after debtors.

Reference List:

  • Debt Collectors Act 114/1998.
  • Magistrates Court Act 32/144.
  • National Credit Act 34/2005.
  • E.M. de la Rey. The Law of Insolvency 8th ed (1988).
Tags: Debt