WHEN over-indebted people enter the debt-counselling process, their creditors are supposed to obey the letter of the law in allowing that process to unfold.
Although the system is for the most part effective in addressing the needs of both parties, some creditors bend or break the law in an attempt to force the person out of debt counselling and back into the credit agreements that got them into trouble in the first place.
According to debt counsellors, this is sometimes done by harassment and threat. Neil Roets, CEO of Debt Rescue, said people needed to be aware of their rights to avoid falling prey to creditors who try their luck with scare tactics.
“The debt review process offers individuals protection against the illegal seizure of goods and property. Being bullied out of that process through threats or false promises means the credit grantors can get their hands on that property. Some debt collectors are outright bullies and operate schemes not that different from organised crime. Midnight telephone calls, harassment at customers’ places of employment – this is not the kind of behaviour one would expect from listed companies,” said Roets.
He added that some clients have been threatened with the loss of their house, its contents and their car.
“We sometimes receive up to eight calls a day from debt collectors who demand immediate payment of all outstanding debts in full – or face eviction and bankruptcy. We’ve seen debt collectors send a tow-truck to a customer’s place of employment to repossess his car. What they fail to tell over-indebted customers is that it is all a ruse.”
Going under debt review can prevent the liquidation of a person’s estate by finding an amicable arrangement with creditors that allows the person to keep their possessions through restructured credit agreements. A mutually agreed-upon monthly sum is distributed between creditors.
Here are Roets’s top tips if you feel you are nearing the point of over-indebtedness.
Before you enter debt counselling:
As soon as you realise you cannot afford to pay your monthly instalments in terms of your credit agreements, or if you received a notice in terms of Section 129 of the National Credit Act from a credit provider, you may approach a debt counsellor to be placed under debt review. As soon as you are placed under debt review, your debt counsellor will have 60 working days to negotiate a new repayment plan with your credit providers. During this time, your credit providers are barred from taking legal action against you.
Don’t wait until you receive demands for payments from credit providers before approaching a debt counsellor. Make sure you make use of a reputable debt counsellor with a proved track record. Be transparent with your counsellor at all times and cooperate with the process.
If you receive a notice in terms of Section 129 of the National Credit Act, immediately approach a debt counsellor as you will only have 10 days to do so for that particular account to be included in your debt review.
Open a new bank account for your salary to be paid in at a bank where you do not have any accounts, in order to prevent “money grabbing” from your credit providers.
If you are already under debt review:
Make sure your monthly payments in terms of your debt-review repayment plan are made promptly and inform your debt counsellor whenever you can increase your monthly payment.
Do not correspond with any of your credit providers and always make your debt counsellor aware of any communication received from any of your credit providers.
Some credit providers do not act in good faith and keep on harassing you even though you are under debt review. If this happens, immediately notify your debt counsellor.
Make sure that your address recorded in your credit agreements where correspondence is to be received is always up to date, as your debt counsellor cannot do this on your behalf.
Ensure that your insurance is in place.
What are the creditor’s rights?
Credit providers or their collection agents may tell you your account is in arrears and your debt review has been terminated. They may tell you they have the right to repossess assets.
If you are being harassed, report these credit providers via your debt counsellor to the National Debt Mediation Association or the Credit Ombud and/or the National Credit Regulator.
The correct process credit providers should follow includes serving a Section 86(10) notice of termination of debt review. Only after a summons has been issued through the proper process can the sheriff of the court, with a warrant in hand, attach the relevant asset.
What happens if you give in to harassment?
IF you hand over your vehicle to the credit provider, it will be regarded as voluntary surrendering of the vehicle.
Not only will you lose it, but you will remain liable for your outstanding arrears, legal costs, sheriff’s costs and storing costs.
The vehicle will then usually be sold on auction at a very low price, which will be deducted from the outstanding payments and costs, leaving you liable for the balance .
*This article was first published in Sunday Times: Money & Careers