Settling unpaid debts
If your debt has been handed to a debt collection agency, knowing your rights can save you money.
Galekhute asks: My Wesbank loan is being paid via a collection agency after it was handed over. The outstanding balance was R43 000 when I was informed that the debt has been sold to the agency.
The agency is now claiming R58 000 for interest and commissions. What is my recourse?Maya replies: If you are struggling to meet your debt repayments always try and negotiate with the credit provider before it is handed over. The commissions and additional interest charges can increase your debt significantly and you now owe even more money.
In your specific case, Paul Slot, head of debt counselling company Octogen says you have several options:
- If this is old debt where no payment has been made for three years and no judgement is in place, the debt may have prescribed. This means effectively that the debt has expired and you are not obliged to pay. If you are not sure ask an expert, but if no payment was made for three years don’t start paying. If you do the benefits of prescription falls away.
- Request a detailed statement and check the starting balance is correct and that subsequent interest and fees are calculated correctly. The fees can be checked on the Council for Debt Collectors website.
- You will notice that fees and interest consume a large part of any repayment. This means if the monthly repayment is low, the amount of time it takes to pay the loan as well the costs of the loan will increase.
- If no legal action is in place, such as a judgement, and you are unable to repay all your debt you can consider debt counselling.
- If you have the means, consider offering a cash settlement. In many cases the agency bought the debt at 10-30 cents per R1 that you owed and they might well accept a settlement offer of 40-50 cents per rand that you owe. If you use this option ensure that the payment is in full and final settlement of the entire debt.
