Have questions about the debt collections process? Use our easy-to-navigate FAQ provided below to find all the answers that you need! If you feel that we are missing anything that you think should be included on this page, please don’t hesitate to get in contact with us here.
A service provider may, in terms of the contract between themselves and the consumer, hand an account over to a third party collection company of their choice for the purpose of collecting the outstanding debt. This action might be taken when you as the consumer fail to honour your monthly payment agreement with the service provider for a period exceeding 90 DAYS and no arrangement has been made nor honoured.
The process of handing over accounts to third party agencies by service providers is purely aimed at having the outstanding debt repaid in full. The collection agency with this mandate will then attempt to make contact with you as the consumer in order to structure payment arrangements and alternative payment methods.
In terms of the Debt Collectors Act, 114 of 1998, a debt collection agency may charge fees for services rendered during the collection of an account. These fees can be kept at a minimum by making payment arrangements and honouring them.
If you arrange to pay a debt, and do not fulfil this obligation, we will be required to contact you again to make new arrangements. This incurs more costs for you. It is therefore in your best interest to ensure that you keep to your payment arrangements to avoid incurring further costs, that you will be legally obligated to pay. The Debt Collectors Act, 114 of 1998, prescribes that we may not charge costs to a debtor of more than R965.00 or an equal amount to the capital / overdue amount, whichever is less. This does not include VAT or the receipting fee of 10% on instalments.
For a detailed list of costs that debt collectors may legally charge, please visit the website of the Council for Debt Collectors for more information...
The account is only handed over for collection purposes after which the collection company in question will return the account to the service provider for further action.
In order to help with this, VeriCred issues a “clearance letter”. This letter only implies that VeriCred confirms the full payment of the account. The obligation remains with you as the consumer to forward this letter to your service provider to have your credit profile updated if needed. You can request a clearance letter by utilising our online portal.
VeriCred has made paying off your account as convenient as possible by making use of several payment methods. You can either make payments at the VeriCred branch where the account has been handed over or via Pay@, EFT, or direct cash deposit into VeriCred’s bank account.
For even more convenience, you can pay via Debit Order. This is cost effective and preferred by many consumers. For detailed descriptions on how to make payments on our accounts, please follow the link to our Payment Methods page here. You can also jump straight into managing your own payments by going through our Consumer Portal here. To ensure total control over your debit orders, ask us for a DebiCheck debit order. Read more about it here: www.debicheck.co.za.
The Debt Collectors Act notes that each time a debt collector calls a debtor they need to be assured that they are indeed speaking to the correct person, to protect the information pertaining to the debtor’s debt.
The reason therefore is not only to adhere to compliance requirements, but also to protect the debtor’s personal information, as well as information about their debt. This prevents Debt Collectors from unveiling confidential information to 3rd-parties.
Debt collectors are legally allowed to charge interest. The rate of interest debt collectors can charge per annum is in accordance with the debtor’s agreement with our client, but cannot be above the prescribed interest rate. If it was agreed that interest be paid, but no specific interest rate was stated, we may charge interest at the current rate of 10% per annum. This amount (mora interest rate) is regulated in terms of the Prescribed Rate of Interest Act, 55 of 1975 and may change from time to time. If a specific rate was agreed upon, we will charge that rate of interest per year.
Interest is calculated on the overdue capital amount and the outstanding costs. We do not charge compounded interest, in other words, no interest on interest. If a debtor requires a settlement amount for a date in the future, our software automatically calculates the interest up to that date.
Every person in South Africa is registered with a Credit Bureau. If a person does not pay his/her accounts, he/she will be listed on that Credit Bureau as a default payer. Further, if a judgement has been obtained against him/her, it will also be noted.
The above directly affects the debtor’s ability to obtain credit from any credit provider. A default listing will remain on his/her name until the debt in question has been settled. Once the debt has been settled, arrangements must be made by the debtor with the credit provider to update his/her information on the Credit Bureau/s. A judgement debt may only be removed from the Credit Bureaus by having the judgement rescinded by the court that granted it. It is a myth that a default will remain on a Credit Bureau for 30 years. The National Credit Act, 34 of 2005, as amended, has brought about a change in how credit listings are maintained by Credit Bureaus. Default listings will in all probability not appear on a debtor’s name for longer than 2 years. Judgement debts, however, will remain for 5 years or until rescinded. Debts that have prescribed will also not appear on any Credit Bureau.
There are two types of cases where this question is generally applicable; in the case of Student Debt, and in the case of Spousal Debt. Both are elaborated on below:
Student Financial Liability
All students are registered annually as provided for in the General Academic Rules, the Statute of the Universities and the relevant provisions of the Higher Education Act. A student who is registered is responsible for payment of the full year’s tuition, residence and other fees.
Attention must be drawn to the contract that forms part of the application for admittance to any University. This contract is signed by the student and/or sponsor/co debtor and binds the student inter alia to the payment of the full tuition, residence and other fees as determined by the University for any fixed year of registration.
By signing and submitting a registration form, the provisions of these regulations are incorporated into the contract between the University and the student. The student accepts responsibility for the payment of all prescribed fees (regardless of whether or not an account is received).
Any amount which is due and payable by the student to the University shall be proven by means of a certificate of balance, which is issued and signed by an authorised official of the university.
Such a certificate shall be binding on the student and will serve as prima facie proof of the computation, extent and existence of the amount owing It will further prove the indebtedness of the student towards the University for purposes of summary judgement, and provisional sentence.
When the student and/or his/her sponsor/co debtor are placed under debt review, no credit may be granted to the student until written confirmation is given by the debt Counsellor that all debt has been settled.
Responsibility of the Student
The responsibility for the payment of tuition and residence fees lies with the student. If the University studies of the student are financed by means of a bursary or loan, the account must be submitted without delay to the bursary or loan grantor for payment.
The student is responsible to see to it that the bursary or loan grantor pays the necessary fees to the University.
Co-debtors and the influence of marriage.
Marriage in community of property is the default position when a couple enters into a marriage and they do not sign an Ante nuptial contract excluding community of property.
If married in community of property, the couple become joint owners of all the assets (property and money) and liabilities (debts and claims) they acquired before and during the marriage.
When you are married in community of property, liabilities incurred before and during the marriage become part of the joint estate. This includes student loans, car loans, personal loans, bonds and so on.
When one of the spouses has been sued and is liable for a debt, the creditor can:
1. Recover the debt from that spouse’s separate estate, if there is one; or, if there is insufficient money,
2. Recover the money from the joint estate.
The creditor need not first try to recover the money from the separate assets of the spouse who incurred the debt, unless the claim is for damages for a delict committed by that spouse.
In all other cases, the creditor has the right to sue both spouses jointly and to recover the money from the joint estate.
Yes. The rate of interest debt collectors charge per annum is in accordance with the debtor’s agreement with our client. If it was agreed that interest would be paid, but no specific interest rate was agreed upon, we may charge interest at the rate of 10% per year in terms of the Prescribed Rate of Interest Act, 55 of 1975.
As mentioned before, this is called mora interest. If a specific rate was agreed upon, we will charge that rate per year. Interest is calculated on the overdue amount. We do not charge compound interest in other words no interest on interest.
Under no circumstances is a debt collector allowed to threaten or harm a debtor, the property of a debtor or that of anyone related to the debtor. We are bound by the Code of Conduct enacted under section 14 of the Debt Collectors Act, 114 of 1998 The Code states that a debt collector will not humiliate or use abusive, obscene, defamatory language towards a debtor or his or her relatives during any form of communications whether orally or in writing. A debt collector will further not intimidate or induce a debtor to pay.
It depends on the type of debt. In terms of the Prescription Act, 68 of 1969, most debts prescribe after 3 years. There are various exceptions for example debt secured by way of a mortgage bond, a judgment debt or taxation imposed by the state or by law, state loans and so forth. These debts each have their own time periods for prescription. Prescription can be interrupted in several ways. One of these are by the debtor making a payment on the debt. Prescription will then start to run afresh on the due date of his next payment.
Debt review is not a judgment nor an administration order. A debtor can apply for debt review in terms of section 86 of the new National Credit Act, 34 of 2005, if the debtor believes that he/she is over-indebted.
The debtor can approach a registered debt counsellor, who will assist in assessing whether the debtor is in fact over-indebted or not. It is important to verify that a debt counsellor is registered. You can do this on the NCRs website: www.ncr.org.za.
After the debt counsellor has assessed the debtor’s financial position and has found the debtor to be over-indebted, the debt counsellor will propose a debt re-arrangement plan to all parties. Once a debtor has applied for debt review, all credit bureaus will be notified to record this. We and/or our client will be notified to halt collection on the debt until the debt review has been finalized.
The NCR is the National Credit Regulator, the organization who regulates the credit industry. They must ensure that the rights of consumers are protected and that credit providers adhere to the obligations imposed on them by the new National Credit Act, 34 of 2005. They do not regulate the debt collection industry. Our industry is regulated by the Council for Debt Collectors.
The Debt Collectors Act, 114 of 1998 as amended, prescribes that we may not charge cost to the debtor of more than R965.00 or an amount equal to the capital overdue amount, whichever is less. This does not include VAT and a receipting fee of 10% on instalments.
For a detailed schedule of costs that debt collectors may charge, visit the website for the Council of Debt Collectors: http://cfdc.org.za/downloads/