Debt Collection can be defined as the process by which a debt (the outstanding amount) is recovered from a debtor (the person and/or institution by whom the debt is owed) on a delinquent or defaulting account on behalf of a creditor (the person and/or institution to whom the debt is owed).
Credit Providing Institutions:
- It is important to note that legal proceeding against a defaulting debtor may commence as early as 20 (twenty) days from the date the account first fell into arrears.
- Section 129 of the National Credit Act states that all credit providing institution must notify the defaulting debtor of its intention to proceed litigiously against a debtor.
- The debtor must be advised of his or her right to seek the assistance of a debt counsellor. If the defaulting debtor does not seek the recommended debt counselling within 10 (ten) days for the date on which he or she was first advised as such, then the credit proving institution may take further legal action. However, if the debtor applies for debt review, no further legal action may be taken against him or her until such time that a court decrees or a debt counsellor confirms that the person is not over-indebted.
What Does the Process Entail?
A courtesy call is made to the debtor to establish contact. Once contact has been established, the debtor is presented with the following payment options:
- That the entire outstanding debt be settled in 1 (one) immediate payment.
- That the outstanding debt be settled in 3 (three) consecutive instalment for which no interest or collection commission will be charged.
- That the outstanding debt be settled in instalments to be negotiated depending on the total of the outstanding debt and the amount the debtor is able to pay in instalments. This process involves the signing of an Acknowledgement of Debt and the incurring of addition cost (including interest and collection commission) for which the debtor will be held liable.
Letter of Demand
If no payment is forthcoming, then the legal practitioner will draft a formal written request demanding that immediate payment in respect of the outstanding debt be made. This letter is sent by way of Registered Mail to the debtor.
If there is no response from the debtor and/or no payment is received within the stipulated time, Summons is issue against the debtor for the recovery of the outstanding debt, all added costs incurred, interest and collection commission (if any).
Notice of Intention to Defend
The defendant (the debtor in the Summons) has 10 (ten) days from the date on which the summons has been served on him or her to serve his or her Notice of Intention to Defend.
- If a Notice of Intention to Defend is received, the legal practitioner will apply for Summary Judgement at which he or she will have to lead evidence to show that the defendant has no real defence, is wasting the court’s time and frustrating the plaintiff (the creditor in the Summons) attempt at restitution. The general legal process will be followed based on the outcome of the said application.
- If no Notice of Intention to Defend has been received, the legal practitioner will apply for a Request for Default Judgment.
Request for Default Judgment
The legal practitioner will have to lead evidence to show:
- that the defendant was formally notified of the outstanding debt by way of a Letter of Demand;
- that the defendant was given adequate time in which to respond and failed to do so;
- that the Summons was issued and served within time to avoid the issue of prescription; and
- that no Notice of Intention to Defend was served and filed; and that no attempt at payment was made on behalf of the Defendant.
If Default Judgment is granted the legal practitioner will draft a formal notification informing the defendant that judgment was granted against him or her. This affords the defendant a further opportunity to settle the outstanding debt.
Warrant of Execution Against Property (or WRIT)
If no response or payment is received, the legal practitioner will draft a WRIT instructing the appropriate sheriff to make an attachment of the execution debtor’s (the defendant in the WRIT) movable property to be sold at auction to settle the outstanding debt, all added costs incurred, interest and collection commission (if any). The outstanding debt may still be settled before the day of the auction. If the money received is insufficient to settle outstanding debt then a WRIT maybe sought against the execution debtor’s immovable property.
Emoluments Attachment Order
Alternatively, instead of issuing a WRIT the legal practitioner may choose to attach the execution debtor’s salary. Therefore if the Oder is granted by the court, the execution debtor’s employer will garnish a predetermined amount from his or her salary until such time that the total outstanding debt is paid. The Order is granted against the execution debtor for the recovery of the outstanding debt, all added costs incurred, interest and collection commission (if any).
To proceed with an action in respect of debt collection, our offices require copies of the following document:
- your Identity Document;
- the contract or agreement or source document/s for which your claim arises; and
- proof of previous payment/s (if any).
We will also require the Debtor’s contact information to be provided. If the creditor is unaware of the debtor’s contact information or the debtor is being evasive, our offices will have to employ the services of a tracing agent.