How to Avoid Conflicts With Creditors and Keep Your Accounts In Good Standing (Even When You’re Low On Funds!)

April 30, 2019

23 million South Africans are credit active. Out of these, 10 million have arrears on more than one account.

In South Africa, the National Credit Act protects citizens from being exploited. The law also governs the provision of credit and the interest rate.

There is more than one credit bureau in South Africa. As a citizen, you are entitled to one credit report from one of the credit bureaus. By accessing your credit report, you are able to check your blacklisted status.

Due to the rising cost of living, many people are taking on more debt in the form of credit cards. In fact, a vast majority of South Africans owe more than three-quarters of their salary. As such, many people have arrears as they are unable to make payments to creditors.

Want to know how you can avoid conflicts with creditors? Keep reading!

Opt for Debt Counselling

South Africans have the option of restructuring their debts. This allows them to make single payments to the National Payment Distribution Agency. Once a debtor makes his contribution, the funds are distributed to various creditors.

Let’s assume your monthly income is R7,000. After debt counselling, you have come to an agreement – R500 to R1000 every month. If R3,000 is deducted and sent to the agency, you will have R 4,000.

This amount can settle your monthly expenses – rent, groceries, and utility bills. If you choose debt counselling, you have to make an appointment with a debt counsellor. They will negotiate with creditors to ensure you get the best repayment rates.

Raise the Defence of Prescription

The Prescription Act governs the prescription of debt. Here is the application of the law. If a creditor does not serve the debtor at the correct address after defaulting, the debtor can seek a defence of prescription.

This is also the same if the debtor is not served with summons three years after defaulting. What you need to know is that creditors can collect debts such as payday loans from debtors. This is true whether they have raised the defence for prescription or not.

Another important thing to keep in mind is that not all debts are prescribed after 3 years. Such debts include  TV licenses, home loans, and municipal rates. This type of debt is prescribed after thirty years.

By seeking the defence of prescription, you have time to organize your finances.

Avoid Conflicts with Creditors

The National Credit Act protects consumers whose accounts are in arrears. The law does so by limiting the amount of fees and interest. As such, creditors cannot claim a debt you owe them 5 years ago and has grown due to penalties and interest.

As a consumer, you can protect yourself. How? By choosing to raise the defence of prescription and going for debt counselling. Once you see a debt counsellor, you can file for a debt review. After this goes through, the creditor has to negotiate with the counsellor.

In the negotiations, the debt counsellor will help with payments.

Looking for personal or payday loans to boost your credit? We can help. Talk to us today!