Debt collection, harassment, and your legal rights

by | Jun 6, 2022 | Personal Finance

If you have ever faced difficult financial periods, you have probably had to deal with the frustrating calls from creditors and debt collectors making all kinds of demands and threats. Entering into credit agreements and falling behind on your payments is stressful for both you and your creditors and they will use all possible avenues to try and collect. Creditors are obliged to collect their debt when consumers default on their payments, however when creditors and debt collectors make you feel distressed, humiliated, or threatened, that is harassment, and it can be legally disputed.


The Regulation of Debt Collectors

The Debt Collectors Act 114 of 1998 was set forth to regulate the conduct of debt collectors in the real world. Debt collection practices in this country are also governed by various other pieces of legislation, including the Consumer Protection Act, the rules of the applicable law society, the National Credit Act, the attorneys act, and the Electricity Regulation Act and the NERSA regulations (for municipal related debt) as well as common law relating to badgering, menacing, and other similar crimes. Secondly with the exception of attorneys (who are governed by the Attorneys Act), all debt collecting companies as well as their directors/members and employees that perform debt collection need to be registered with the Council for Debt Collectors (CFDC).


Consequences of not being registered

Any collections from debt collectors that are not registered therefore are not only null and void, but also illegal. The penalty could be anything between a fine and imprisonment of up to three years. In terms of attorneys, it is regarded unprofessional (and can result in the said attorney being sanctioned by their law society) to contact a client who also have legal representation directly.

If you are being unreasonably harassed by debt collectors, ask that debt collector for a copy of their registration certificate. Let the debt collector know that you are aware that collecting debt without being registered is unlawful and may lead to penalties for that person. And should it turn out that they are not duly registered, report them.


Other regulations related to collecting

The Debt Collectors Act also specifies certain times that debt collectors are not allowed to contact customers this includes Sundays or between 9 pm and 6 am on any day. The Act also deems it unlawful when debt collectors repeatedly make untruthful threats of legal action, and this should be reported to the CFDC. A good indication of whether collectors are making empty threats is when they constantly call you making the same threat over and over again and never acting on it.

It is also illegal, according to the Act for debt collectors to harass, intimidate, or extort consumers by coercing them into paying or signing acknowledgement for a debt that they would otherwise never have paid or acknowledged. All collections that fall outside of the parameters of the Debt Collectors Act as well as collections for debt that can be lawfully disputed under any other legal regulation, can be regarded as harassment, intimidation, and extortion, and should be reported to the Debt Collectors Council or your local police station.


Debt that can be legally disputed

To further unpack consumer rights when it comes to debt collection it is imperative to highlight reckless lending and prescribed debt outlined in the National Credit Act 34 of 2005. According to the NCA, prescribed debt is any debt that has not been paid (partially or otherwise) or acknowledged by consumers, nor pursued by creditors for a period of three years or more. Reckless lending on the other hand is defined as any credit agreement that has, 1: been entered into without conducting a complete affordability assessment for having been conducted on the consumer, or 2: when an affordability assessment was conducted and even after revealing that the consumer was overindebted or would become overindebted as a result of the credit, yet the credit was still granted, and 3: when a credit agreement is entered into without the consumer fully understanding the terms and the risks involved. In terms of the National Credit Act 34 of 2005 reckless lending and prescribed debt is prohibited and can be legally disputed and written off. Needless to say, it is also illegal to collect debt obtained from unregistered lenders who often charge high interest rates, otherwise known as loan sharks, and such dealings also need to be reported to the National Credit Regulator or SAPS.


When it comes to taking blacklisting

Due to the devastating notion that the threat of being blacklisted often inflicts on consumers, patrons would do well to be well versed in the circumstances that unlawful for a supplier to list you as well as what to do when dealing with a threat of being listed. 

The legal fact is that all listings need to adhere to provisions laid out in the National Credit Act which include sending the consumer a notice advising them that they will be listed if they don’t pay within a period of 28 business days. Also, the debt in question needs to be unpaid credit agreements that fall within the realms of the National Credit Act, as many credit agreements such as residential leases, and incidental debt like cellphone contracts, doctors’ bills, and service accounts do not constitute credit agreements under the NCA. Finally, the notice sent out to the consumer needs to include indications that alert and explain to the consumer all their other options for addressing their situation (such as, if the consumer is over indebted, to apply to a debt counsellor for assistance).


Taking Further Legal Action

One of the major threats that debt collectors often use to abuse consumers is the threat of taking further legal action. However, knowing your rights when it comes to this aspect of debt collection could impede any prolonged harassment or intimidation by debt collectors. The reality, legal action is only taken when all other avenues for pursuing the debt have been exhausted and unsuccessful. According to the National Credit Act, credit providers need to allow atleast 20 days of the consumer being in areas before taking legal proceedings and also ensure the consumer was duly notified of the intention to take legal action.

In the current economic climate of finding yourself overindebted and falling behind on your debt repayments is the daily lived experience of millions of consumers all over the world. Founder and Debt Counsellor at National Advisors encourages consumers to know that they are not alone, and help is available.

Contact NDA today, let us help you effectively deal with your debt problem.

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