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WHAT ARE YOUR RIGHTS WHEN YOU ARE IN DEBT?

Staff Writer · 5 min, 13 sec read
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Many South African’s have suffered the most because of the economic downturn
brought by the Covid-19 pandemic and national lockdown.

With some having to be retrenched and failing to pay off their debts or even
take care of their basic needs. At this point, it is safe to say that South
African’s are struggling with their debt(s) causing them to default.

You may be stuck with debt and not sure where to start to pay it off or ask for
a payment holiday.

Well, when your bills outweigh your income and if you are at risk of being sued
for an unpaid debt or you are already facing a lawsuit filed by a debt
collector, you need to know your rights and options.

In this article, we highlight your rights as a consumer so you are well informed
about what your next step should be regarding your debt.



It is advisable that you pay off all your debts to avoid any form of accusations
or responsibility negligence.

But, as we all know, anything can happen, causing one to backtrack and not be
able to catch up on the missed payments and your debt being handed to debt
collectors.



For most debt collection agencies, their core business is to get you to pay but,
it is advantageous for you to know your rights as there are various laws that
regulate the process of debt collection.


CONSUMER KEY RIGHTS

According to the National Debt Collection Act of 1948, If you are called by a
debt collector, you have the right to verify if the company is registered with
the Council for Debt Collectors (CDC) first before you discuss anything with
them or make any payment.

You have a right to request a cost breakdown of the debt collectors’ fees to
check if it is in line with the fees stipulated by the CDC.



Also, according to Section 15 of the National Debt Collection Act 114 of 1998,
no debt collector may serve you with any false legal documents, and as a
consumer, you have the right to report any debt collector that presents
themselves as a sheriff, police officer or officer of the court as this is
considered fraudulent.

To cross-reference any documentation received, you may contact the CDC to
verify. It is good to also note that no debt collector may threaten to give or
give any information regarding your debt situation to your employer,
specifically that which may affect any future opportunities as an employee.

Under the same law, no debt collector may use force or threaten you or your
family. If so, you have the right to report it to the relevant authorities.


CAN A DEBT BE WRITTEN OFF?

South Africa has what we call “Prescribed Debt” which can be explained as an old
debt that has not been acknowledged for over a period of three years.

In summary, a debt is prescribed if you have not acknowledged the debt in the
past three consecutive years, either in writing or verbally, if you have
committed to making payment but have not fulfilled the promise and if you have
not been summoned to make a payment by a creditor for the debt within the past
three consecutive years.



If the correct rules are followed, debt prescription may relate to the following
debts: retail accounts, credit card accounts, personal loans payday loans, gym
memberships, cellphone accounts, and money owed on vehicle finance.

It is ideal for you to pay off your debts, but it is legally wrong for the debt
collector to demand payment many years after you have defaulted on the account.


CAN DEBT COLLECTORS TAKE LEGAL ACTION?

According to the National Credit Act, credit providers can initiate legal
proceedings from as early as 20 days. However, this can be achieved through
following of proper protocol. Section 129 of NCA requires that all credit
providers notify consumers that they intend to initiate legal proceedings before
doing so.

Furthermore, consumers must be advised of their right to visit a Debt
Counsellor. Consumers have ten days to apply for debt review/debt counseling.
Following this, credit providers can then proceed with legal action.

Once debt review has been applied for, no legal action can be taken until a
court or debt counselor has found the consumer is not over-indebted.


DEBT REVIEW/COUNSELING

Debt counseling is a unique debt solution designed and instituted by the
National Credit Regulator to specifically assist indebted South African
consumers, preventing them from being blacklisted.

Through this process, consumers are not only given a second chance at life
through having their debt consolidated in a manageable way but are also given
protection against creditors and debt collectors.



If you are over-indebted, you can approach a debt counselor to help you with the
legal process but it is your duty as a consumer to make sure that the debt
counselor you approach is registered with the National Credit Regulator (NCR).

The benefits of being under a debt review include an affordable monthly budget,
restructuring of debts so you only pay one monthly debt repayment, taking over
all communication with credit providers, negotiating with credit providers for
reduced payments, and they offer legal protection.


BE CAREFUL OF DEBT COLLECTION SCAMS

Yes, many debt collection calls are legitimate but, you will have to be careful
as some are scams by imposters attempting to collect on debts that don't even
exist because they are paid off, discharged, forgiven, and time-barred (beyond
the statute of limitations) or entirely made up.

Victims often pay up out of fear that they might actually owe the debt and will
suffer serious consequences for not paying. Some scammers might just contact you
seeking your personal information to enable them to commit identity theft.

Amongst many signs, the following are some of the signs that the debt collector
is legit; they will request your full Social Security number, complete birth
date, or other sensitive personal information.

They will harass you and tell you to pay immediately and you might not even know
about the debt they want you to pay. To be safe, never discuss or pay the debt
until you receive a written notice about the debt and the collection agency or
without verifying with the Council of Debt Collectors.


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