Deflect debt collectors
KNOW YOUR RIGHTS: THREE YEARS AFTER DEFAULT DEBT IS PRESCRIBED
Much of the ‘debt’ claimed by oftenillegal debt collectors can’t be legally recovered.
Independent legal specialist Leonard Benjamin provides a checklist for dealing with debt collectors:
Prescribed (expired) debt isn’t payable
If a borrower defaults on a debt and three years elapses, it’s prescribed (expired) and not recoverable. This applies to overdrafts, credit card and other debts (besides mortgage debt). The bank keeps the debt “alive” by issuing summons within the three years.
Beware ‘prescription interruption’
Debt collectors will phone and try to get you to admit you owe money (‘interrupting prescription’).
Debt collectors will get you to interrupt prescription and keep the debt alive in a number of ways: you make payments after default; the creditor issues summons or gets you to admit you owe the money on the phone.
Benjamin says a debtor should say: “If you want to communicate with me, please put it in writing. Goodbye.”
If you want to pay an old debt, never agree to it on the phone. Benjamin says most “debts” claimed by debt collectors have been on-sold by banks and lack the necessary documentation for legal enforceability.
Many debt collectors are illegal
Forensic accountant Andre Prakke says many debt collectors act outside the Debt Collectors Act – as such any debtor admissions are null and void. Consumers must ask from the outset if the debt collector’s registered.
“Loan companies that have expired or prescribed debt offer new loans of a much smaller value on the condition that the previous loan be added to this one and it becomes a new loan. This will also include all their costs on the old loan and interest to that date. When the two loans are combined, the … interest rate can be outrageous.”
Creditors also bring cases before the high courts that belong in magistrates’ courts (where litigation’s cheaper and expeditious).
Benjamin’s tips:
Use Truecaller or a similar app to block calls.
If a debt collector gets through to you, insist on only dealing with them in writing.
Deny. They’re accusing you of owing money – they must prove this.
Ask for copies of the agreement they rely on and a breakdown of the debt they’re claiming.
Refuse to discuss anything until they’ve answered your above request, in writing. Don’t confirm your ID number. Check your credit record at least once a year. If you think a debt is prescribed, lodge a dispute and have it removed.
“Your proper response to a debt collector should be: ‘You are breaking the law by trying to recover prescribed debt’ and to hang up,” Benjamin says.