‘Consumers often end up not paying accounts which they deem to be small amounts with the thinking that the credit provider will not pursue them for collection. This is a completely incorrect perception as leaving small amounts, with the hope of going unnoticed, can end up costing the consumer so much more,’ warns Credit Ombud Manie van Schalkwyk.
The office of the Credit Ombud recently dealt with a case where the consumer ignored an amount of R 336.20 that was due to a credit provider. His matter was handed over for collection and he ended up making payments of R 900.20, with the credit provider still showing that he had an outstanding balance of R 350.00.
Once a credit provider hands over an account to debt collectors or attorneys the collectors are entitled to add a variety of costs and fees, which include:
- Fees for ‘taking instruction’ (fees to open a file at the attorney’s office)
- tracer fees
- drafting of legal documents fees (e.g. summons and consent to judgement documentation)
- sheriff’s fees (if they obtain judgment or an emoluments attachment order from court)
- charges for phone calls, sms’s and letters sent
On top of the previously mentioned fees, interest also accumulates on the outstanding debt. All these costs added together can have the consumer left with a substantially larger amount to settle in comparison to the amount they owed at the outset.
‘Debt-stress is hard to acknowledge to oneself as well as to family members and distressed consumers sometimes think that if they ignore a problem for long enough it will go away. Instead, the problem typically escalates and even in cases of repossession of an asset, the consumer may still be left owing money,’ says credit expert Dr Penelope Hawkins of Feasibility, an economic policy and research company.
According to the National Credit Regulator’s latest statistics, the number of impaired accounts has increased to nearly 17 million in comparison to the previous quarter.
‘In addition to the consumer suffering unnecessary financial losses by having to pay over more than they owed, their credit record will also be negatively affected by having defaults or judgements taken against them,’ adds van Schalkwyk.
‘Once you see that you will not be able to honour your payments the best thing to do is to immediately contact the credit provider and make alternative arrangements with them. Doing this may just save you from being handed over for collections, because once this process is in progress, it will cost you much more to settle your debt,’ he advises.
Consumers can contact the office of the Credit Ombud to lodge a dispute with regards to their accounts , debt counsellor or any credit bureau matters on 0861 66 2837 or http://www.creditombud.org.za/.
