Episode 2
Financiers, Consumers, Debt Collectors, Lawyers and other Animals.
What happens when a debtor defaults
on his/her commitments towards a Creditor. What are the actions Creditors take ?
Without going into too much detail
one or all of the under mentioned is going to happen:
The debtor might phone the creditor
or visit them at their place of business to discuss his problem. The Creditor
might phone the debtor. Invariable a letter of demand will be in the mail
already. Initially all will be very
cordial and possibly an arrangement as to how this is going to be rectified
will be made. All fine and well? Nooo not really………….. Should the debtor default on this arrangement
the tone of voice and accompanying facial expressions is going to change.
Smiles disappear.
You will be greeted by
a very official good morning Mr. You
will not be John or Mary anymore. You will be Mr or Mrs……………
Just for clarification : It is in all
probability not the doing of the debtor that landed him in the predicament. One
of a few things could have happened.
Firstly The creditor might not have
given execution to his required caution in terms of the NCA in that he might
not ( More than a 50% probability) have evaluated the debtors ability to repay
the borrowed money. This could be
classified as reckless lending which could cost him the loss of the full
capital lend out. (This action will be discussed in more detail later)
Secondly The debtor might have
encountered a few problems: He
might have had a serious sudden expense (broken down vehicle, burglary, whatever)
This can normally be handled in a month or so if the creditor plays ball and
extend the possible arrears.
He might have lost his job, might
have been retrenched, his business might have a cash flow problem or any other
real reason. The reason normally is of no real concern to the creditor. You see
….as far as they are concerned it is the problem of the Debtor.
Now the problem might escalate. The
debtor might not be able to honour his commitments anymore and will start
avoiding the threatening phone calls, Sms’s or emails. The Creditor will now
send out a notice in terms of s129 of the NCA which by law have to be received
by the Debtor before any legal action can commence. Please not I say RECEIVED.
( in a recent case commonly known as Sebola it was established by the
constitutional court that proof of receipt of this notice must be given and not
just proof of dispatch thereof)
Normally at this stage the debt might be given over to debt collectors who will start the process again of phoning and
threatening the consumer. In some cases, depending on the bank’s view of
possibility to collect, the debt is ceded to the debt collectors who now operate on
the view that you owe them money. Should
the debtor make an arrangement with them they will collect a collection fee as
well as interest. They will in all
probability send the debtor an AOD (acknowledgement of debt) where amongst
others the debtor will wave his right defend any action and consent to judgment.
I will in future episodes handle all
the different ways and tricks Creditors use to extend pressure and stress on
debtors. For now I am only going to list
a few actions a DEBTOR might
take and cautions to observe when dealing with Creditors. I know
I might get a lot of flack from a lot of people (mostly creditors) but what the
heck. I am playing with the lions tail
and I might just be gearing up for a class action of sorts – details later.
Here are the 7 cardinal rules when confronted by a
Creditor:
(Just remember : should this land a court of law the creditor will use every piece of paper and every word in a conversation against you)
1.
Never admit to owning them anything –
not verbally or in writing.
2.
Never make specific arrangements you
do not have 100% control over.(and you most probably never have 100% control over
anything!)
3.
If phoned by a debt collector no
matter who they are insist on them identifying themselves. The following are the bare minimum you
request they email to you:
a.
A copy of their mandate from the
Creditor to act on his behalf.
b.
A copy of the debt collector’s
registration certificate with the debt collectors council.
c.
Proof that the caller are actually
employed by the Debt collector agency.
d.
A copy of the original alleged
instrument of debt.
e.
A full copy of how they have arrived
at the alleged amount owed to them.
f.
Full details of the relationship
between the debt collector and the debt – is he operating on behalf of a
creditor or has he taken session of the debt.
4.
Never but Never sign anything – Like in
Never.
5.
If you ever consider to ignore rule 3 see a
Lawyer first !
6.
Especially never sign a new AOD - never !
7.
Do not agree with anything that is said to
you on the phone- remember
you do not know who the person on the other side is.
Episode 3 to follow
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