Maximum interest rates on loans from 6 May 2016

Maximum interest rates and costs applicable to different types of credit transactions – applicable from 6 May 2016	Present repo rate 7%
Mortgage agreements	Repo Rate + 12% per year
Credit facilities	Repo Rate + 14% per year
Unsecured credit transactions	Repo Rate + 21% per year
Developmental credit agreements (i.e. small business, low income housing)	Repo Rate + 27% per year
Short-term transactions	5% per month on the first loan and 3% per month on subsequent loans within a calendar year
Other credit agreements	Repo Rate + 17% per year
Incidental credit agreements	2% per month

Source: Government Gazette, 6 November 2015

Initiation fees on credit agreements are also limited under the regulations.

Credit type	Maximum initiation fee
Mortgage agreements	(a) R1 100 per credit agreement, plus 10% of the amount in excess of R10 000 (b) Never to exceed R5 250
Credit facilities	(a) R165 per credit agreement, plus 10% of the amount in excess of R1 000 (b) Never to exceed R1 050
Unsecured credit transaction	(a) R165 per credit agreement, plus 10% of the amount in excess of R1 000 (b) Never to exceed R1 050
Developmental credit agreements –       for small business development –       for low-income housing	(a) R275 per credit agreement, plus 10% of the amount in excess of R1 000 (b) Never to exceed R2 600 (a) R550 per credit agreement, plus 10% of the amount in excess of R1 000 (b) Never to exceed R2 600
Short-term credit transactions	(a) R165 per credit agreement, plus 10% of the amount in excess of R1 000 (b) Never to exceed R1 050

Handling School fee debt collectors

Schools and Debt collectors

The above link refers to a recent article about actions of Schools to collect on arrear schoolfees.

It is with sadness that one take note of the financial position of schools. But it is even more sad to take note of the financial position of parents with no work or not enough money to be able to afford school fees. But I am a consumer activist and not the keeper of the schools finances and if the schools did their job in the first instance debt collectors should not be involved. Here, in a nutshell,  are the legal requirementse _ When a child is admitted to a public school the Principal MUST discuss the details of possible exemption with each and every parent in person and give him/her a letter signed by the Principal as to the parent's right to apply for exemption. This letter must also be signed by the parent and a copy of it handed to them. The school will need their copy should they start any collection process. This interview MUST be done again should a parent miss even one payment to determine if there was a deterioration in the financial position of the parent. 

Should you be in default of school fees and you could have applied for exemption and did not the first question that arises is :Why did you not apply ?

The law gives you the following rights:

1. To be informed of your right to apply for exemption - a form (Annexure A), contemplated in

    section 41(4)(c) of the Act,must be completed by the parent and signed by the principal 

    of the school and by the parent, indicating that the parent has been informed about the

    provisions of the Act.

2. To apply for such exemption if he/she qualifies and this must be granted - 

    the school does not have any right to refuse this if you qualify - it is as 

    simple as that. 

3.  There is no time limit on your right to apply - this can happen any time in the  

     year should your financial position change

4.  The ONLY qualifying criteria is your GROSS income - which includes 

      everything you earn - it is for this reason that the bank asks for bank statements

       - There is no requirement in the law

      that require of parents to go around at all banks and get letters to the effect

       that they do not havea bank account there -  No school can refuse anyone

       that qualifies for exemption if they refuse to do this - This is the Law !

5.  Should you miss a payment it is required that the Principal again arrange a meeting to determine

      your present financial position and again give you a letter as to your right to apply for exemption

      which must be signed by the Principal and you.  Before this has been done no legal action can be

      instituted by the school.

NOW HERE IS THE PROCESS WHEN A DEBT COLLECTOR PHONES YOU AND YOU KNOW YOU SHOULD BE ABLE TO QUALIFY FOR EXEMPTION:

1. Answer the phone politely

2. Ask for the debt collection agency's debt council registration number

3. Ask for the  debt council registration number of the actual person talking to you.

4. Ask for an email address - this is critical - do not engage on the phone with them any further. Inform them that you will send them an email - If they refuse just put the phone down. Do this everytime until you get an email address ( Emails are paper trails and you have proof of everything)

5. If you did get an email address send them an email along the following lines ( IF you did not get an email send the email to the school principal.

" Please supply me with a copy of the letter contemplated in the section 41(4)(c) which was given to me and which the Principal and myself have signed during the last interview with me to enable me to respond properly to your demands"

That is it - If that letter is sent to you, you are at fault and did not apply as you should - that does not preclude you applying now anyway.......................................

No income and debt to pay................

Take time to read this - there is light in the tunnel that is not the train !
The debt counseling industry is one of the industries that show a very nice growth. Unfortunately, their target market is people with an income and able to pay some debt. This market creates itself in that the main reason - and in my mind the only reason why people get into this type of trouble is........wait for it - Greed.  Greed by the lender and the borrower.  The lender wants to give you credit that you do not need at totally overinflated prices - the latest washing machine saga involving Lewis stores and a gardener  is resounding proof of this - Charging someone nearly 4 times the price of an article with all sorts of "advantageous bullshit add-ons" cannot be described as anything else than Greed.

The borrower's greed comes in where he wants to own stuff he cannot afford.  The word "budget" in their minds are for dummies - "I know what I do " -

The one consumer that is not catered for is the one with no Job.  He had a job and lost it for some reason or another and now is being haunted by collectors of all sorts

Their profile looks something like this and you might identify with this:

Age - Anywhere from around 20 to 50 - mostly
Race;  All - mostly White due to "corrective measures" of government.
Composition of family - mostly family with children in school
Property ownership: Yes and no
Rentals: I would say about 60 to 70% are renting their accommodation
Car:  In most cases - and being paid off and possibly in arrears.
Credit profile; Good going onto bad as a result of their financial position.
Other assets:  Furniture, some electronics.
Lifestyle - Classic middle income but also lower income.
Challenges: Surviving - keeping food on the table- children in school etc.

Whatever the reason you are not working the challenges are the same when it comes to Debt collectors:  They haunt you telephonically and schools harrass you about school fees.

Our seminars are going to cover (amongst other things) the following: ( These seminars are being sponsored and will be FREE OF CHARGE)

1.  How to handle telephone calls from debt collectors.
2.  How to negotiate with creditors.
3.  Your rights regarding school fees in state schools.
4.  Actions when confronted by threats of attorneys.
5.  Where and how to complain.
6.  What to do when you receive a summons.
7. Changing your mindset from negative to positive - why do you want to be an employee?
8. Discussion on real business opportunities.
9. Why Multilevel marketing is not an option

What you must do to attend a seminar:  Register on the right to receive follow-up emails on future posts about this 

         

School fees and the law - public schools

It is nearly 2016 and in South Africa the public schools will start early in January.
By law all parents who enroll their children in Public schools MUST pay school fees - IF their income allows this 

You can check whether you qualify for partial, total or not at all for exemption here:

Calculating exemption possibility

(click on the (PDF) link of the first google link that appear - it is government notice R 1052 published on the 18th October 2006)

It is imperative that parents take note of their right to exemption of school fees if they qualify in terms of the law.

3.   Obligations of governing bodies and principals when learner is admitted to a public school

(1) The principal must notify a parent of the following:

(a) the amount of the annual school fees to be paid and the procedures for applying for exemption;

This is not an option - it is a task that must be performed by the principal.

(b) the fact that the parent is liable for the payment of school fees unless

he or she has been exempted from the payment thereof;

This again places the onus square on the shoulders of the principal and following on 

to this is the following requirement of an action to be performed by the Principal: 

(c) a form (Annexure A), contemplated in section 41(4)(c) of the Act,

must be completed by the parent and signed by the principal of the

school and by the parent, indicating that the parent has been

informed about the provisions of paragraphs (a) and (b);

This again is not optional - it MUST be done.

(d) one copy of the signed form contemplated in paragraph (c) will be

handed over to the parent when the learner is admitted to the public(e) 

If a parent is in arrears by one month or more, the governing body will

investigate whether the parent qualifies for exemption before acting

in terms of section 41(1) of the Act.

 This is the punchline -  an action to be performed by the governing body and it also spells out the actions to be taken BEFORE any legal action can be taken

Prescribed debt - comments by ADRA ceo Marius Jonker

The following article has been copied from "the latest" Adra Link Magazine written by the Association of debt recovery agents' ceo Marius Jonker on the issue of Prescription and their view on Section 126B of the NCA as amended on the 15th of March 2015.

I will underline the issues where I am commenting on and will paste my comments in Red ink.


Section 126B and Prescription
Section 126B is a prominent feature of The National Credit Act as
amended. There are several interpretations of section 126B
which vary substantially. (*1)Interpretations encountered thus far
includes that the wording of section 126B is unconstitutional
and as such not truly enforceable, that section 126B only creates
a duty to educate the consumer on the defence of prescription
and thereafter normal collection processes may follow until the
consumer successfully raises the defence of prescription,(my comments:)

(*1)This, of course, would be the view of creditors. We have seen various attempts from creditors to try and enforce the collection of very evidently prescribed debt and bullying consumers into agreeing to pay on these accounts or to sign an AOD.  Our view is that these attempts are criminal in its best form and that consumers take the legal route and lay charges with this amendment as basis.As is mentioned further on in the article transgressions can cost a creditor dearly and consumers must be wide awake and take them head on should it seem to be an attempt at collecting on prescribed debt after the date of 15 March 2015................. Our view is clear:  The insertion with the amendment makes it clear that  


that
the section creates an onus on the credit provider to ensure that
no enforcement action is taken on potentially prescribed debt
and should a debt be prescribed that the credit provider (nor its
agent the debt collector) may take any enforcement action on
the account whatsoever.
To further complicate the matter many credit providers have
based their internal policies on how to deal with prescription not
on legal opinion but on potential reputational risk they may
incur.
Readers are requested to share legal opinion they may have
obtained on this and any other topic with the ADRA office. It is
our intention to provide members with as many available
opinions as possible to assist them in making their own decision
on which interpretation they believe is correct. Where requested
legal opinions will not be published but used for internal
information purpose only.
Irrespective of the opinion the member may prefer, credit
providers and debt collectors will have to implement a sound
prescription management policy backed by the necessary
systems. A transgression of the section may result in a fine being
imposed on the credit provider to a maximum amount of R1m or
10% of its annual turnover per transgression. Credit providers
will insist on outsourced debt collection service providers having
a sound policy and systems in place to prevent such liability for
the credit provider/client.
Any prescription management policy will have to deal with the
following basic issues:
1. Ensure all information relevant to prescription is received
from the credit provider when receiving instructions. Such
information will include the last payment date, the date when
the debt became due and payable, default dates and when
the prescription period commenced, what the relevant
prescription period is and any events which might have
interrupted or stayed prescription.
2. The debt collector will have to train all staff on the topic of
prescription and ensure that all events which interrupt or stay
prescription are identified and recorded. Where prescription
is interrupted as a result of an acknowledgement of debt
(implicit in an undertaking to pay the debt in instalments or
otherwise) the recordings of such conversations will have to
be stored for the life span of the account.
3. Prescription interrupting or staying events will have to be
reported to the credit provider/client.
4. Accounts nearing potential prescription in the hands of the
debt collector will have to be identified, the credit
provider/client informed (in writing) and specific instruction
obtained on how to deal with such accounts.
It will be prudent for members to address the topic of
prescription in detail in their service level agreements with
clients. In particular members are advised to stipulate under
which circumstances the member will be liable to the credit
provider for any losses suffered by the credit provider/client as a
result of debt prescribing in the hands of the debt collector or a
penalty imposed for a transgression of section 126B. Ideally the
debt collector will want to be completely absolved of liability but
this might not always be achievable.
Members will be kept advised of any developments on this front
and are members reminded to please send legal opinions on this
(or any other relevant topic) to the ADRA office at
info@adraonline.co.za.
Opinions and views will be published in the “Members Area” of
the website as and when they become available. Two detailed
opinions were placed at time of drafting of this message. It is not
within ADRA's mandate to prescribe to members how to manage
their businesses or to provide them with legal opinion. The
views published (as with all other views and opinions) are
subject to the full disclaimer appearing on the website.
Marius Jonker
CEO
|

SOLUTIONS TO SELLING “DIFFICULT TO FINANCE” FIXED PROPERTIES

DECEMBER 7, 2015 The Hive comments

Purchasers are increasingly finding it difficult to obtain financing for the purchase of farms, agricultural land, commercial and industrial property.  There are many reasons for this of which banks’ so-called affirmative finance is only one of them.  Banks see these types of properties also as “high risk” – or at least higher risk than normal home loans.  Many sellers of these properties can consider granting the purchaser a bond for the purchase amount, to be paid off over a period of time. There is only one problem.  The NCA requires the seller to register as an incidental credit provider even if it refers to only this one transaction and the seller might never intend to finance anyone ever again.

Some sellers, even with the advice of their attorneys accept an acknowledgement of indebtedness and consent to judgment as sufficient protection, prior to shaking hands and signing off the transfer documents. Before the NCA, the mere registration of the bond or the notice confirming the installment sale of a property registered at the Deeds Office was sufficient. Together with the required written agreement it constituted protection to the incidental money lender in the event of a defaulting purchaser.

The National Credit Act has changed all that. The Act provides, inter alia, that in any credit agreement where the credit amount exceeds R500 000 (five hundred thousand Rand), the lender must be registered as a credit provider. This includes the occasional private farm seller, commercial land owner et all, even if it is a one-off arrangement with no intention by the seller to provide credit to any other person ever again. Failure to register as a credit provider prior to a transaction that can be defined as a “credit transaction” is a transgression of the Act.

Should the credit provider not be registered and the purchaser defaults on the payment agreement, section 89(5) of the National Credit Act is unequivocally prescriptive on how the courts are to deal with such circumstances. A recent judgment in the Constitutional court regarding the right not to be arbitrarily deprived of property and the so-called Limitation clause. J van der Westhuizen delivered a majority judgement on 10 December 2012 which declared the arbitrary forfeiture of property to the state prescribed in section 89(5)(c) of the National Credit Act to be inconsistent with section 25(1) of the constitution, and thus invalid.

But this still leaves the prospective credit provider – in a case of default by the buyer – with the prospect of dealing with the NCA whose intention is to discourage the provision of credit outside the framework set by the legislature.  There are other recourses for the seller – which I am not going to deal with here (  pursuance of such agreement must then be made in terms of unjustified enrichment, and specifically the conditio ob turpem vel iniustam causam.)

All this can be prevented by just registering with the NCR which in itself for the purpose of the deal is not a major train smash.

Although some of my learned friends differ on the point of selling of  property utilizing “Hire Purchase”, which according to our interpretation is not governed by the NCA as no interest is charged and only an occupational rent is paid ( plus normally a deposit) and the transaction is noted on the title deed at the deeds office – There are other requirements that have to be met – like payment of the transfer duties or VAT if applicable has to be made within a certain period (it will attract penalties of not paid)  But the transaction is 100% safe for both parties in that ownership will effectively pass only to the purchaser upon transfer and as the transaction is noted on the title deed, whatever happens to the seller does not negatively affect the buyer.   Expert legal opinion has been obtained on this issue by writer hereof and contains amongst others the following reasoning behind the system:

1.   The purchaser enter into a purchase agreement of land where the property is properly defined and priced

2.       The payment of the purchase price is described as an amount having to be paid up front (a deposit) and the rest of the purchase price at a future determinable date.

3.      No interest is charged on any future portion of the purchase price to be paid.

4.      . Only monthly occupational rent is payable.

5.      The transaction is logged on the title deed

Anyone requiring assistance with any of the above actions are welcome to contact writer hereof

For further reading see National Credit Regulator vs Fillippus Albertus Opperman and others, case number CCT34/12 [2012] ZACC 29 and case law quoted by both the majority judgement and descending judgment written by J Cameron.

School fees : Actions when confronted by a debt collector

In terms of the schools act every parent is required to pay school fees when their children attend a government school.  It is also the Parent's right to apply and be granted exemption in terms of the formula described in the act if they are in financial difficulties. In most cases parents either do not know of this right or how to go about it.   The Principal and governing bodies have been tasked with specifics regarding this and in my humble opinion if they neglected to do what the act requires of them they cannot collect on this Debt. 

In Government Notice in the Government gazette nor 23311 dated 18 October 2006  Grace Naledi Mandisa Pandor, Minister of Education after consultation with the council of Education Ministers and the Minister of finance and in terms of sections 39(4) and 61 of the South African Schools act no 84 of 1996 published refulations ind the Schedule for general information.

This is critical information to every single person in South Africa who were or are unable to pay school fees and are being haunted by debt collectors.

The Notice higlights the following : ( Exact extract from the notice in red - my comments on this in black)  

3.   Obligations of governing bodies and principals when learner is admitted to a public school

(1) The principal must notify a parent of the following:

(a) the amount of the annual school fees to be paid and the procedures for applying for exemption;

This is not an option - it is a task that must be performed by the principal.

(b) the fact that the parent is liable for the payment of school fees unless

he or she has been exempted from the payment thereof;

This again places the onus square on the shoulders of the principal and following on 

to this is the following requirement of an action to be performed by the Principal: 

(c) a form (Annexure A), contemplated in section 41(4)(c) of the Act,

must be completed by the parent and signed by the principal of the

school and by the parent, indicating that the parent has been

informed about the provisions of paragraphs (a) and (b);

This again is not optional - it MUST be done.

(d) one copy of the signed form contemplated in paragraph (c) will be

handed over to the parent when the learner is admitted to the public(e) 

If a parent is in arrears by one month or more, the governing body will

investigate whether the parent qualifies for exemption before acting

in terms of section 41(1) of the Act.

 This is the punchline -  an action to be performed by the governing body and it also spells out the actions to be taken BEFORE any legal action can be taken 

Should you have been contacted in any way by a debt collector - what can you do ?

If you are of the opinion that you could have qualified for exemption were you informed that you can apply for exemption and did the Principal act in accordance with the act ?

Template to be used in an email to the school Principal if collections are being done by the school itself or to the debt collector if this is done via a debt collector or attorney. 

DEAR SIR/MADAM,

Your recent email/telephone call refers.

To enable me to properly respond to your collection effort on an alleged debt of school fees I need the following from you :

a.   A copy of the form, contemplated in section 41(4)c of the South African Schools act no 84 of 1996 that was signed by myself  and the Principal informing me of the amount of the annual school fees to be paid and procedures for applying for exemption, 

as well as:

b.   Actions taken by the governing body when it appeared that payment of the school fees were one month in arrears to investigate whether the parent qualified for exemption before acting in terms of section 41(1) of the Act.

Upon receipt of the requested information I will revert back to you.

Greetings

(Your name)