How to Deal with Debt Collectors

Learn effective strategies to deal with debt collectors and clear your debt in South Africa with this blog post. 

Understanding Debt Collectors and Their Role

Debt collectors play a crucial role in the debt collection process in South Africa. They are individuals or companies hired by creditors to recover outstanding debts from consumers, and are typically paid a percentage of the amount collected, often also charging service fees. Debt collectors have the legal authority to contact debtors, negotiate repayment plans and take legal action if necessary.

Debt collectors are governed by the National Credit Act (NCA) in South Africa, which sets out specific guidelines and regulations they must adhere to. They are prohibited from using unfair or unethical practices when collecting debts, such as harassment, threats, or misrepresentation. As a debtor, you have certain rights protected by the NCA, including the right to be treated with dignity and respect, the right to dispute a debt and the right to request proof of the debt.

Assessing Your Financial Situation

Before taking any action to clear your debt, it is important to assess your financial situation. This involves evaluating your income, expenses, and outstanding debts to determine your ability to repay. Start by creating a detailed budget that includes all your sources of income and expenses, such as rent or mortgage payments, utility bills, groceries, and transportation costs.

Download your FREE, customisable budget template here to create your budget now!

Next, calculate your total debt and prioritize your repayments. Identify which debts are urgent and require immediate attention, such as those with high interest rates or overdue payments.

Assessing your financial situation will provide you with a clear understanding of your debt obligations and enable you to make informed decisions on how to address them effectively.

Understanding the debt collections process in South Africa

1. Courtesy call
   • While this is not a required step, a creditor will likely give you a call to let you know you've missed a payment.
2. Receive a letter of demand (Section 129 Notice) explaining that you have missed a payment on your account and have an outstanding balance owing.
   • If you've received a Section 129 Notice, take this seriously. This is the last step before legal proceedings can begin against you.
   • Did you know: if you have defaulted on your account for 90 days, a creditor will likely hand over your account to a debt collector.
3. If you don't make any arrangements to pay your account after 10 days of receiving a Section 129 Notice, a debt collector or creditor can approach a court for a judgement to be handed down.
4. If a judgement is granted, a Sheriff of the Court can request that you appear in court by issuing you with a summons.
5. You can then either pay the outstanding fees and accept the judgement, or defend it.
6. If you choose not to respond to the summons, the court can issue a warrant of execution — to initiate a garnishee order or repossess your assets.

What Are Debt Collectors Not Allowed to Do?

1. Harassment and threats

Debt collectors are not allowed to use harassment or threats to pressure you into paying your debt. This includes:

• Aggressive behaviour: They cannot use intimidation or abusive language, and must remain professional and respectful at all times.
• Threats of violence: Any threats of physical harm or intimidation are illegal and should be reported immediately.
• Repeated calls: Excessive phone calls, especially during unsocial hours, are considered harassment.

2. Misrepresentation

Debt collectors are not allowed to misrepresent themselves or the situation to you. This includes:

• False claims: They cannot falsely claim to be attorneys or government officials.
• Deceptive practices: They must not deceive you into believing legal action is imminent when it is not.

3. Contacting you at inappropriate times

Debt collectors must adhere to reasonable contact times:

• Business hours only: They should only contact you during business hours unless you have agreed otherwise.
• Avoiding family and friends: They should not contact your family, friends, or employer about your debt.

How Do I Complain About a Debt Collector in South Africa?

If you have a complaint against a debt collector, you must put it in writing and under oath. You can submit this complaint through the Council for Debt Collectors (CFDC) — electronically via their website, or by emailing info@cfdc.org.za. 

How Do I Know If a Debt Collector Is Legit in South Africa?

You can check whether they're registered on the Council for Debt Collectors' active register here. 

Can You Go to Jail for Not Paying Debt in South Africa?

You cannot go to jail simply for unpaid debt. The only circumstances that can lead to jail time are:

• Failing to pay child maintenance.
• Not paying your SARS tax bill.
• Failing to appear in court after being issued with a summons.

What's the Worst a Debt Collector Can Do?

A debt collector cannot physically approach you or serve you with court documents themselves, but they can follow the legal process to get a judgment granted against you, which could lead to:

• Repossession of assets like your home or car.
• A garnishee order to have funds deducted directly from your salary toward your outstanding debt. 

Exploring Debt Repayment Options

Once you've understood your financial situation and the debt collections process, it's important to explore the debt repayment options available to you. There are several strategies to consider, depending on your financial situation and the amount you owe.

Debt consolidation loan

One option is a debt consolidation loan — combining multiple debts into a single loan, usually with a lower interest rate. This can simplify your repayments and potentially reduce the total amount you owe.

Debt settlement

You can approach your creditors and ask for a settlement amount — usually a reduced amount compared to the total owing.

Debt counselling through a reputable debt counselling agency

This involves working with a Debt Counsellor who first checks whether you're over-indebted, then negotiates with your creditors on your behalf to reduce your interest rates and create a repayment plan that fits your budget — repaying your debts in a manageable way, and potentially reducing your total debt amount. When you go under debt counselling, debt collection calls stop and your home and car are legally protected.

Meerkat was voted as one of The Top 10 Large Debt Counsellors in the country!

Each debt repayment option has its own advantages and disadvantages, so it's worth carefully weighing each one against your financial goals and circumstances.

Read next: What Happens If You Don't Pay Your Debt in South Africa?