In a country where the financial literacy levels are low, some unscrupulous businesses pray on those who know no better. Even with access to more information online and available research methods, consumers get ripped off left, right and centre. Debt collectors naturally send shivers down consumers’ spines. Businesses claiming to have ‘authority’ bully helpless consumers into paying hundreds of rands over to debt collectors. Let’s have a look at some recent cases in the country and also explore some tips on how to prevent being on the bad end of these transactions.
What Is Currently Being Done To Prevent Ruthless Debt Collectors From Over-Chanrging?
Earlier in August an application was filed by Stellenbosch Law Clinic in the Western Cape High Court which aims to achieve some justice when it comes to the regulation of debt collection and the high costs thereof. The clinic has been joined by numerous members in the credit industry including all the major banks, credit providers, ministers of Justice and Trade and Industry, as well as the National Credit Regulator.
Senior attorney at the university’s Law Clinic, Stephen van der Merwe, sheds some light on the widespread abuse in the industry.
We have a lot of situations where people have been garnished with emolument attachment orders against their salaries. When you sit down and look at it you find amounts in excess of five, six, seven times the principal debt and they’re expected to continue making payments on it,” he says
Van der Merwe says that the debt collectors are able to get away with this due to the lack of regulation and unprescribed cap in fees.
Another issue is that the common law in duplum rule, which caps interest accrued to equal to the capital amount. This has been interpreted in a number of ways by the various institutions.
This is why we are going to court: to request a declaratory order that the statutory in duplum is applicable to all the interest, the costs, including the legal fees that are levied against the debtor – irrespective of whether a judgment has been granted.
The clinic also aims to have all the over-changed collection fees and interest repaid to the debtors once the court has clarified the regulations and caps. The only issue here is that the debt might have prescribed.
Here Are Some Tips When Dealing With Debt Collectors:
- If you start getting calls, messages or emails about your unpaid debts, contact your credit providers. Let them know that you are struggling to make payments but are busy sorting out a payment plan. This could buy you some leniency.
- If you are finding it impossible to juggle all your debt, speak to a debt counsellor. A debt counsellor will perform a financial assessment for you. They will work out a new affordable, payment plan should you qualify for a debt solution.
- A debt counsellor can also save your home and vehicles form being repossessed if its not too late.
- Make sure you question the fees and charges that are being pushed onto you.
- If the debt in question is old, it may be prescribed. Then you are no longer liable for this debt.
If you have any other questions about debt, interest rates and fees, loan repayments, legal action, consolidation, debt collectors or debt counselling, contact Vantage Debt Management for free advice.