very interesting article on iafrica. i think a lot of people don't really know about prescribed periods.
http://business.iafrica.com/personal-finance/debt-scams-insurance/753829.html
Lately I have been receiving floods of calls from consumers asking for help with letters of demand. Some of the debts are so old they can hardly remember buying the item let alone paying for it. It would seem that debt collection agencies have cottoned onto the fact that if they buy bad debt from companies they can often bully unsuspecting clients into handing over cash for jam.
So what do you do if one of these opportunists contacts you?
Well, the single most important thing that you must do is? Nothing! Do not acknowledge the debt. Ask for a statement detailing the amount allegedly owing plus every fee and interest charge. This is your right in terms of the Promotion of Access to Information Act.
If your statement reveals that last payment in respect of this debt was more than three years ago, and in that time you have not acknowledged the debt verbally or in writing or started making payments, and if you have not been summonsed in respect of the debt, the debt has legally prescribed and you are not liable to pay it.
Know thy Prescription Act!
The Prescription Act allows collectors and attorneys to attempt to get someone to pay a debt which has prescribed and once you have acknowledged that old debt or made a payment, the debt is revived and you have to keep on paying.
Also, it's up to the debtor to point out that the debt has prescribed. Nobody can do it for you. So knowledge of this Act really is power.
Always respond to the claim in writing by fax, email or registered letter (preferably all three) by saying that you believe the debt has prescribed and that if the collector claims otherwise they must prove this by way of a detailed statement showing that your last payment was made within the previous three years.
Challenge them to provide this proof, or summons you so that you can raise the defence of prescription before a magistrate - failing which they should close your file.
Get everything in writing!
Send the debt collector a letter stating that if you do not receive a response within seven days you will consider the matter closed. Make sure you keep a copy of that letter, because you will need it if you ever get summonsed to court over that debt or get approached by another debt collector about it. The three-year prescription law does not apply to municipal debt (rates) or mortgage debt (home loans).
In some cases debtors continue to pay monthly installments to settle a debt which has already been settled. Request a paid-up letter, but don't stop there - make sure you get a detailed statement. You may find you have overpaid and are due for a refund.
Also watch out for paying interest on interest. If the amount you are being asked to pay is several times the amount of your original debt, ask very pointed questions about the amount which the creditor handed over for collection. It may already have had the maximum amount of interest included, in other words, it was the capital plus interest. According to the in duplum rule, interest can never amount to more than the outstanding balance. No more interest should have been added, but the collector treated it as the capital amount only and then added interest.
So ask the collector or attorney to prove by way of a statement whether that handover amount included interest or not. The Association of Debt Recovery Agents (Adra) is willing to offer advice and information about the industry to consumers. Call 041 583 5396 or email [email protected].
http://business.iafrica.com/personal-finance/debt-scams-insurance/753829.html
Lately I have been receiving floods of calls from consumers asking for help with letters of demand. Some of the debts are so old they can hardly remember buying the item let alone paying for it. It would seem that debt collection agencies have cottoned onto the fact that if they buy bad debt from companies they can often bully unsuspecting clients into handing over cash for jam.
So what do you do if one of these opportunists contacts you?
Well, the single most important thing that you must do is? Nothing! Do not acknowledge the debt. Ask for a statement detailing the amount allegedly owing plus every fee and interest charge. This is your right in terms of the Promotion of Access to Information Act.
If your statement reveals that last payment in respect of this debt was more than three years ago, and in that time you have not acknowledged the debt verbally or in writing or started making payments, and if you have not been summonsed in respect of the debt, the debt has legally prescribed and you are not liable to pay it.
Know thy Prescription Act!
The Prescription Act allows collectors and attorneys to attempt to get someone to pay a debt which has prescribed and once you have acknowledged that old debt or made a payment, the debt is revived and you have to keep on paying.
Also, it's up to the debtor to point out that the debt has prescribed. Nobody can do it for you. So knowledge of this Act really is power.
Always respond to the claim in writing by fax, email or registered letter (preferably all three) by saying that you believe the debt has prescribed and that if the collector claims otherwise they must prove this by way of a detailed statement showing that your last payment was made within the previous three years.
Challenge them to provide this proof, or summons you so that you can raise the defence of prescription before a magistrate - failing which they should close your file.
Get everything in writing!
Send the debt collector a letter stating that if you do not receive a response within seven days you will consider the matter closed. Make sure you keep a copy of that letter, because you will need it if you ever get summonsed to court over that debt or get approached by another debt collector about it. The three-year prescription law does not apply to municipal debt (rates) or mortgage debt (home loans).
In some cases debtors continue to pay monthly installments to settle a debt which has already been settled. Request a paid-up letter, but don't stop there - make sure you get a detailed statement. You may find you have overpaid and are due for a refund.
Also watch out for paying interest on interest. If the amount you are being asked to pay is several times the amount of your original debt, ask very pointed questions about the amount which the creditor handed over for collection. It may already have had the maximum amount of interest included, in other words, it was the capital plus interest. According to the in duplum rule, interest can never amount to more than the outstanding balance. No more interest should have been added, but the collector treated it as the capital amount only and then added interest.
So ask the collector or attorney to prove by way of a statement whether that handover amount included interest or not. The Association of Debt Recovery Agents (Adra) is willing to offer advice and information about the industry to consumers. Call 041 583 5396 or email [email protected].
