Consumers guide to Prescribed debt and what to do when confronted with a threat of collection.

SEE ALSO : HOW TO HANDLE DEBT COLLECTORS ON THE RIGHT HAND SIDE OF THIS BLOG

The national credit act 34 of 2005 governs the processes and legal issues and rights of credit providers and consumers alike.  On 13 March 2015 an amendment was implemented to this act that has far reaching implications for Credit providers and consumers alike.  The following paragraph is the most crucial relating to this discussion of prescribed debt:

 No person may continue the collection of, or re-activate a debt under a credit agreement to which this Act applies— which debt has been extinguished by prescription under the Prescription Act, 1969 (Act No. 68 of 1969); and (ii) where the consumer raises the defense of prescription, or would reasonably have raised the defense of prescription had the consumer been aware of such a defense, in response to a demand, whether as part of legal proceedings or otherwise.’’.

This in effect makes a criminal offence should a debt collector try to collect on this debt

Getting back to the Prescription act the following needs to be noted : ( for the purpose of this discussion I am not going into legal arguments about the act and this will suffice for now to initially determine the actions of CONSUMERS in cases where they are hassled by debt collectors. )

The act describes the specific debt that prescribes after specific time. The ones that we are not going to discuss here are debt covered by a mortgage bond, debt owed in terms of a judgment, debt owed to state departments and tax

The ones that create the most problems are amongst others the following:

1.    Personal loans and other forms of loans

2.    Credit cards

3.    Store accounts

4.    Gym membership

5.    Cell phone contracts

6.    And basically any other unsecured debt ( Debt where there are surety signatories are also unsecured and the rules will also apply to sureties )

The definition of prescription in layman’s terms is that should the last payment on this debt be more that 3 years old it has prescribed.  If an acknowledgement of debt has been signed since then the debt will only prescribe after 3 years from date of last payment on this “new debt”  If no successful legal action have been taken on this debt during the past three years the debt has prescribed.  Lawyers letters, s129 notices , threats and telephone calls and emails or letters from the creditor or an agent on his behalf(debt collectors or attorneys alike) does not stop prescription!

Actions of consumers when confronted with a telephone call from a debt collector

1.       You answer the call.
2. Caller asks you to identify yourself. NEVER DO THIS.  Your answer: “You called me, first identify yourself by giving me the following information: ( Write all this down diligently)  If during this initial discussion the party on the other  side wants to say or ask anything insist on them giving you the details – if this fails JUST PUT THE PHONE DOWN ! – They will soon get the message. 
a. “Give me your full name – spell it for me”
b. “Give me your telephone number”. Repeat to make sure you have it correct
c.  “Give me the full name and location of your firm – spell it for me.”
d. “Give me your email address – spell it for me.”
e. Thank them and say: I will send you an email

2.      

F     Follow up email :

(Compile your email along the following guidelines – You can add or delete whatever you think is applicable)

“Dear sir/madam

             This email is send without prejudice and with all rights reserved.  Nothing contained in this message constitutes an offer, warranty or representation from me. The contents herein are for discussion purposes only. Please note that I claim my rights in terms of  The national credit act 34 of 2005 as amended as well as the Prescription Act, 1969 (Act No. 68 of 1969 as far as might be applicable in this instance.

            Your call to me today refers.

1.       To enable me to properly respond to your call please supply me with details of the alleged debt that your call has relevance to.  Who was the credit provider, how did the debt come about and please supply me with a copy of the original signed credit agreement in this instance (This in terms of NCA 65(4)a & b)

2.     If you are a debt collector please supply me with your council for debt collector’s

     registration number as well as that of your company.

3.    I will need a detailed statement of the account to date hereof.

               

                  This in the first instance

               Greetings,    (Your name)

            Should you receive the requested documents you can now determine whether the debt has prescribed utilizing the definitions given in the first part of this post?  In that instance you send them the following email:

“Dear sir, Madam,

This email is send without prejudice and with all rights reserved.  Nothing contained in this message constitutes an offer, warranty or representation from me. The contents herein are for discussion purposes only. Please note that I claim my rights in terms of  The national credit act 34 of 2005 as amended as well as the Prescription Act, 1969 (Act No. 68 of 1969 as far as might be applicable in this instance.

           

It is evident from the documents you sent me that the debt has prescribed and your attempts at collecting this is an illegal act in terms of the amendment to the NCA that came into force on the 13^th day of MARCH 2015.  Please confirm to me that you will now stop harassing me with this issue. Failure to do that will force me to report your actions to the council for debt collectors and lay a charge against you with the South African police.

(if they did not supply you with their relevant registration numbers you can add the following)

Your non conformance to my request for your relevant registration numbers with the council for debt collectors are in breach of your service level agreement with the council and will also be mentioned in my complaint to that organization

Greetings, (Your name) “

One man's opinion on Life and Debt

The concept of debt is older than the written word.  I am reading an interesting book called

“Debt the first 5000 years” and on the first page I had a few revelations: (These are not something new yet we need to take cognizance of it)    Here they are in no particular order   ”If you owe someone money he owns you “    “You have enslaved yourself”    “You are going to regret this”    “You will be treated as secondary to the lender”  “There is no such thing as an ethical lender”

The reason for these posts are to enlighten debtors (that is you if you owe someone money) on some of the revelations I am on about and the first of those is this one “There is no such thing as an ethical lender”

Never ever think any of the slogans of any of the banks have your best interest at heart.  It does not.

If you ever feel abandoned the only thing you have to do is to miss a payment on a loan and see how many people will actually WANT to talk to you. 

Banks are Businesses. Businesses are in business to make money.  Everything else is secondary. They will do anything (UN) ethical in the process.   The African Bank debacle in South Africa is a classic example.

They enslaved hundreds of thousands of the poorest of the poor by LENDING THEM MONEY at the most ridiculous interest rates and then utilize a system called Salary emolument orders which is a (i)legal  and a most (un) ethical  system enforced through   (un) ethical bank staff, lawyers and courts in South Africa.

I read an article this morning by a lady by the name of Theda Muller called “When in debt, giving up is not an option”

She had the best of intentions  writing this.  I agree with around 90% of what she says. But and as far as I am concerned a “But” supersedes everything said before.   She is a bit out of feeling with reality.

The  MAIN problem I am having is this :   She wants you to trust your creditors and that is like standing in front of the bull and saying:   You are not going to charge me and then bend down and look him straight in the eyes.

Accept that they do not have your best interest at heart. They will stoop down to the lowest of low to get their money back.

I do not profess you should not talk to the bank when you are in trouble.  But be wary – You are looking into the eyes of the bull.

“ Dear Joe, we (do not) understand what you  are going through. Please fill this document out and we will present it to credit management and get back to you soon” The document has to be signed and contain clauses like “if I default again I consent to judgment”  “We do not have to give you any further notice”  “ I consent to you taking my vehicle back without further documentation”  There are a few 100 more of these legalspeak and (UN) ethical bankspeak clauses around. 

Life happens and so does challenges. Whoever said challenges comes in ones. It comes in pairs, in tens or even worse.   You lose your job, You get sick and use up your sick leave. And all your annual leave. All that is left is unpaid leave.  You get a new job at much less salary as before. You are the victim of BEE.  Etc. etc. 

The bank (might) believe you once. And offer you some relieve (on their terms of course) They might even believe you twice – if you bend down low enough and take a while to get up from your knees .

But life happens. 

I am not purporting to have the solutions -  I am stating the challenges that we need to find solutions to.

Institute of Debt Management

As concerned consumers I think the time has arrived that we critically look at some issues relating the "Credit" and  "Debt" and everything around it.

Amongst other things the following  need to be critically assessed and improved :

1.   The whole process of credit application and approval - The NCA has 

      guidelines and rules and regulations but these are very evidently not adhered

      to by most of the role players in the credit industry.

2.   The whole system of Debt review, "debt counseling" and the technical      

       application of this.

3.   The options open to debtors when they do not "Qualify" for debt counseling.

4.   Solutions to the debt crisis in relation to educating people in the budgeting process.

5.   The role of Financial advisors in the process of debt.

6.   The role of lawyers in the debt process. ( for and against debtors)

7.   Debt collection methods.

8.   Qualifications, registration and compliancy processes of the relevant role players

9    The influence of regulating bodies and to what extend do they exceed their powers ?

      (NCR, FSB, council for debt collectors etc etc )

The purpose of setting up the Institute of Debt Management and its structure:

1.    It will be a formal company. (not an NGO)

2.    It will contract with debt counselors and other suitably qualified individuals to deliver 

       services to  specific clients that will be assigned to them in terms or an agreement

      with the Counsel.

3.   We will not be dictated to by anyone - We will operate within the ambit of any

      and all  laws applicable

4.   We will not give advice directly to anyone - clients will be referred to a relevant 

      expert who will contract directly with that client as to the services he will be rendering

      and that expert will be receiving remuneration for his services as per his regulated fees.

       More details to follow shortly