What Are Your Rights When You Are In Debt?

Many South African’s have suffered the most because of the economic downturn brought by the Covid-19 pandemic and national lockdown.

With some having to be retrenched and failing to pay off their debts or even take care of their basic needs. At this point, it is safe to say that South African’s are struggling with their debt(s) causing them to default.

You may be stuck with debt and not sure where to start to pay it off or ask for a payment holiday.

Well, when your bills outweigh your income and if you are at risk of being sued for an unpaid debt or you are already facing a lawsuit filed by a debt collector, you need to know your rights and options.

In this article, we highlight your rights as a consumer so you are well informed about what your next step should be regarding your debt.

It is advisable that you pay off all your debts to avoid any form of accusations or responsibility negligence.

But, as we all know, anything can happen, causing one to backtrack and not be able to catch up on the missed payments and your debt being handed to debt collectors.

For most debt collection agencies, their core business is to get you to pay but, it is advantageous for you to know your rights as there are various laws that regulate the process of debt collection.


Consumer key rights

According to the National Debt Collection Act of 1948, If you are called by a debt collector, you have the right to verify if the company is registered with the Council for Debt Collectors (CDC) first before you discuss anything with them or make any payment.

You have a right to request a cost breakdown of the debt collectors’ fees to check if it is in line with the fees stipulated by the CDC.

Also, according to Section 15 of the National Debt Collection Act 114 of 1998, no debt collector may serve you with any false legal documents, and as a consumer, you have the right to report any debt collector that presents themselves as a sheriff, police officer or officer of the court as this is considered fraudulent.

To cross-reference any documentation received, you may contact the CDC to verify. It is good to also note that no debt collector may threaten to give or give any information regarding your debt situation to your employer, specifically that which may affect any future opportunities as an employee.

Under the same law, no debt collector may use force or threaten you or your family. If so, you have the right to report it to the relevant authorities.


Can a debt be written off?

South Africa has what we call “Prescribed Debt” which can be explained as an old debt that has not been acknowledged for over a period of three years.

In summary, a debt is prescribed if you have not acknowledged the debt in the past three consecutive years, either in writing or verbally, if you have committed to making payment but have not fulfilled the promise and if you have not been summoned to make a payment by a creditor for the debt within the past three consecutive years.

If the correct rules are followed, debt prescription may relate to the following debts: retail accounts, credit card accounts, personal loans payday loans, gym memberships, cellphone accounts, and money owed on vehicle finance.

It is ideal for you to pay off your debts, but it is legally wrong for the debt collector to demand payment many years after you have defaulted on the account.


Can debt collectors’ legal action?

According to the National Credit Act, credit providers can initiate legal proceedings from as early as 20 days. However, this can be achieved through following of proper protocol. Section 129 of NCA requires that all credit providers notify consumers that they intend to initiate legal proceedings before doing so.

Furthermore, consumers must be advised of their right to visit a Debt Counsellor. Consumers have ten days to apply for debt review/debt counseling. Following this, credit providers can then proceed with legal action.

Once debt review has been applied for, no legal action can be taken until a court or debt counselor has found the consumer is not over-indebted.


Debt review/counseling

Debt counseling is a unique debt solution designed and instituted by the National Credit Regulator to specifically assist indebted South African consumers, preventing them from being blacklisted.

Through this process, consumers are not only given a second chance at life through having their debt consolidated in a manageable way but are also given protection against creditors and debt collectors.

If you are over-indebted, you can approach a debt counselor to help you with the legal process but it is your duty as a consumer to make sure that the debt counselor you approach is registered with the National Credit Regulator (NCR).

The benefits of being under a debt review include an affordable monthly budget, restructuring of debts so you only pay one monthly debt repayment, taking over all communication with credit providers, negotiating with credit providers for reduced payments, and they offer legal protection.

Be careful of debt collection scams

Yes, many debt collection calls are legitimate but, you will have to be careful as some are scams by imposters attempting to collect on debts that don't even exist because they are paid off, discharged, forgiven, time-barred (beyond the statute of limitations) or entirely made up.

Victims often pay up out of fear that they might actually owe the debt and will suffer serious consequences for not paying. Some scammers might just contact you seeking your personal information to enable them to commit identity theft.

Amongst many signs, the following are some of the signs that the debt collector is legit; they will request your full Social Security number, complete birth date, or other sensitive personal information.

They will harass you and tell you to pay immediately and you might not even know about the debt they want you to pay for. To be safe, never discuss or pay the debt until you receive a written notice about the debt and the collection agency or without verifying with the Council of Debt Collectors.