across the bar

debt collectors charges

by Steve - Posted 21 October 2008

A while back Carte Blanche did a story on people who were paying debts off to attorneys and debt collectors in monthly amounts but the overall debt kept growing. We get queries on this a lot so here is some info that should hopefuly help. 

The judgment debt is made up of the original amount you owe, plus interest up to the date of the judgment (usually at 15.5% per annum), plus the legal costs allowed by the court for the judgment. This is now the amount that you owe to the creditor. The only amounts that can be added after that is additional interest at 15.5% per annum on the judgment debt until it is paid in full and additional legal costs based either on the magistrates court tariff or some other fixed tariff. These tariff's usually specify a maximum amount that can be charged for each item e.g. a letter or telephone call. The person collecting the money every month is also entitled to charge a collection commission of 10% subject to a maximum amount of R300 plus VAT per payment.

If you find that the debt you are paying off is escalating rather than reducing, take the following steps:

1. Check that the debt collection agency who is collecting your money is properly registered (check www.debtcol-council.co.za) 

2. Ask the attorney or debt collection agency for a full breakdown of the balance - showing how interest is calculated (rate and period) and itemising all legal charges after the judgment.

3. If the interest or legal charges are excessive, make a formal complaint to the applicable Law Society or to the Debt Collection Council (see website above).