A Constitutional Court decision is a boon for debt collectors, writes Mungo So ggot
DEBT collectors are cashing in on the legal havoc caused by a Constitutional C ourt judgment last year which effectively robbed the courts of the power to ja il debtors.
Several attorneys claim debt collectors — both registered debt collection a gencies and freelance “heavies” — have snapped up a substantial amount of t heir work in the wake of the judgment. Now that there is no threat of jail deb tors can, as one attorney said, “happily go into debt” as far as the law is co ncerned.
Debt collectors are supposed to be members of the Association of Debt Recovery Agents (ADRA) which binds them to a strict code of conduct.
Those who are not can be less scrupulous. A former policeman familiar with deb t collection, who asked not to be named, says the new breed are often former b oxers — such as former heavyweight champion Jimmy Abbott, who is understood to have quit the profession and become deeply religious — and occasionally
former policemen. Several members of the Civil Co-operation Bureau assassinat
ion squad have also done debt work.
These new collectors, according to the former policeman and lawyers associated with collecting money, usually refrain from hard-line tactics at the start of
their inquiries.
But if they fail to get payment they resort to methods which include finding o ut where debtors’ children go to school, killing pets and damaging gardens. Th ey normally take a 20% cut — or more if it is “dirty” money — and charge an extra commission of R2 000 to R5 000 if their clients require them to teac
h debtors a lesson and beat them up.
“It’s a moral thing,” says Eugene Joubert, managing director of Snyman & Partn ers, of his less savoury competitors’ work. “Some people just want to teach .. . a lesson.”
Snyman & Partners is one of the 52 members of ADRA which strictly forbids viol ence, phoning people up in the middle of the night and other “bullets in envel opes” tactics.
Unlike several firms of attorneys contacted by the Mail & Guardian, Joubert do es not think jail was ever an effective threat to debtors and so is unsure whe ther the Constitutional Court judgment has had that much of an impact.
But he believes companies are increasingly turning to firms like Snyman & Part ners — which employs 600 telephonists to counsel debtors — as they shy a way from the hefty fees charged by attorneys.
He says there has been a recent surge in debt accompanying a consumer splurge, with many clients being small and medium-size businesses which have have open
ed in the past couple of years. He adds that companies have become far less ea ger to extend credit.
Wright Rose Innes partner Graham Carrington, an attorney specialising in debt collection, says that while Parliament revises the law, it appears many compan ies are turning to debt collectors.
He says the Constitutional Court ruling last October which effectively declare d it unconstitutional to jail debtors had deprived attorneys of one of their c hief weapons against debtors.
Before the ruling, attorneys could force debtors to come to court to pay up an d ask the court to jail them if they failed to do so, making failure to pay de bt the only jailable civil offence. But warning notices issued by attorneys co uld be left with a relative or friend, meaning debtors could be jailed without being aware of the charges against them. The court had argued it was unconsti
tutional t o effectively jail debtors without hearing their side of the story first.
Carrington says a new version of the Magistrates Act — the legislation whic h had previously allowed the courts to imprison debtors — will probably clo se the loophole and resurrect the threat of jail.
Under the revised Act debtors would be jailed for ignoring a summons, a crimin al offence. As summonses had to be issued in person, it would be a fairer syst em, he says.
Another attorney says the ruling has “wreaked havoc”. Before, there were more than 100 debt inquiries in the Johannesburg courts every day. Now there are fa r less, he said. “At the moment the law is failing to do justice to both sides — creditors and debtors — so society is finding other ways to do so.”
His bitter comments stem not only from the fact that the profession has lost o ut, but also reflect the seedy side of the debt-collection business.
For, despite the ADRA rules, there are firms which tread a fine line between r estraint and strong-arm tactics. A leading medical aid company employs a debt collection agency which recently dispatched an armed man to the home of a jour nalist who owed R500.
The collector turned up with a Rottweiler — and his family — in the car.