You’ll be billed – it’s the law

If a debt collector rings you up, you will probably be billed for the call. This is permitted by the Debt Collectors Act, which outlines what expenses and fees a debt collector can charge for, excluding value-added tax.

For example, a debt collector can charge R20 for a letter, a registered letter, a fax or an email. The registration fee for a registered letter can be added to this.

Electronic communication, other than a fax or an email (such as an SMS) can be charged for at R2.80, but the law allows for a maximum of 10 such electronic communications a month.

Necessary phone calls, which are not consultations, can be billed at R20 a call.

If original documents are delivered at the debtor’s house or place of work, the maximum fee is R198.

The law allows the debt collector to charge a fee of 10% of an instalment received from the debtor, but this cannot exceed R480. Some debt collectors waive this or use it as a negotiating tool to get the debtor to pay up sooner to avoid it.

Overall, however, the law stipulates that the total amount recovered from a debtor cannot exceed the capital amount of the debt, or R965, whichever is less.

In the case of one large collection agency, which did not want to be identified, it said fees hardly ever amounted to the maximum and they only make up 4% of the company income. Commissions on collections are the main source of revenue. —