Debt – fighting back
Citizens of democracies cannot be controlled by overt force. So they must be controlled by far subtler means. Via the media and other forms of conditioning. Keeping us meek and compliant, responsible and hard working, requires that we stay in the dark about how badly we have been cheated by society.
We have all been subjected to conditioning without realizing it. What can we do now to take back control over our own lives? We can inform ourselves – shun the popular media and dig deeper – and then we can find out how to change our behavior.
You see, the model citizen these days works hard, pays over most of his or her salary to debt repayments, makes the banks and other lenders very happy, and all at the price of freedom and financial ease. The statistics tell us that most people are stuck in this trap because 99% of people will not retire in financial comfort. So the price of ignorance is the loss of our freedom and our dreams.
I think that’s too high a price.
So, let’s take a look at more ways to fight back against debt.
Get a better deal
Overdrafts, home loans, credit cards, personal and company loans – you’re going to battle to repay a lot of debt of this kind, and worse still, you have probably pledged your assets as security, so you have essentially NO real security left in your life. What should you do about this?
You must take back control of where your money goes every month. If you’re a good customer of your bank, go to the bank manager, and renegotiate your interest rates.
Your bank fees – how much are you paying? You could be shocked to find out.
Work it out and then go and complain!
Take along your statements that prove what a good customer you are. How well you repay your monthly commitments.
Be nice, but be firm.
Demand what is your due. Don’t be intimidated. Threaten – politely – to go to another bank if you aren’t satisfied. We are aware of doing this when we get a home loan but we should do this for everything!
If you have to apply for a loan, do not be grateful for whatever terms they assume you will accept! Negotiate! The interest and the fees are what kills you with debt – inform yourself before you go – phone around, find out what to expect, know your rights – then go in a position of strength.
If you have unit trusts, sell them rather than ceding them to the bank. Sell them first! Before you take out the loan! This way you avoid being in the demeaning position of having to ask their permission should you ever need to sell them. I’ve seen a man in his 70s have to do this and I can tell you it is sickening to see someone of this age be reduced to the status of a child, asking permission of some 25 year old “manager” to sell his own assets!
Fight back when you are hounded for money
If you get a call asking for money, first of all admit nothing, not in writing, not verbally. Remember, phone calls are routinely taped. Do not admit to owing anybody anything. Not yet. You will see why later.
Secondly, find out who exactly is calling. They might say they are phoning “on behalf of Edgars” but that doesn’t mean they are Edgars. They might be debt collectors. Professional collectors of money. Your account has been handed over to them so that they can recover the money you owe. They often get paid a percentage of the amount collected which makes it worth their while to squeeze every cent out of you that they can. A tough job to do, best done by people with a very thick skin who are not interested in your story. At best, that’s what you’re likely to be dealing with. At worst, they could be bullies, making threats, and pestering you inappropriately.
So check who they are. Take control of the conversation. If they say they are debt collectors, then they are supposed to be regulated by the Debt Collectors Council. Check their credentials with the council: P O Box 836 Silverton 0127 Tel: +27 12 804 9808 Fax: + 27 12 804 0744 e-mail:
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· www.debtcol-council.co.za.
Thirdly, while you’re about it, find out how exactly they are allowed to behave. Here is a summary but to be sure you should find out from the council.
Fourthly, check up on the money they’re claiming. If they are demanding money on a personal loan, credit card or store card, you have a legal right to a statement of how much you supposedly owe and how it has been calculated under the various credit acts. If they won’t co-operate, complain to the council. If you get no joy, go to the Consumer Affairs Provincial Department or agency in the province. The council should be able to point you in the right direction.
Suppose that you have done all this. What’s the next step?
Once you know who you are dealing with, the next step is: put away your “Good Citizen” badge. Put away your conscience, your sense of responsibility, your commitment to paying your debts. Because they did so (the opposite side), long ago. We’re brought up to feel guilty if we owe money and to do our best to repay it. But it will be a very lopsided and unbalanced interaction if you bring your emotion and your ethics into it, when they don’t. Realize you are now in a business arrangement and it is up to you to protect your assets and minimize the damage. You plan to act in a businesslike, professional, unemotional manner.
Now for a crucial step – this is why I said, never admit to owing anything, not verbally, not in writing:
If the debt is a very old one they may no longer have a legal right to chase you for it. But they may be doing it anyway, relying on the fact that most people do not know the law.
As soon as you admit to owing a cent, they are back in business because the law will say that you have “re-opened negotiations” and brought the issue back to life. Paying even 50c is an admission that the debt is still alive.
Usually a creditor has only three years from the date of the last transaction to try to recover a debt through the courts. If this time has already passed, the court will not enforce their claim. The claim is said to have prescribed (which means, lapsed).
But you will wreck everything if, on day 364 of year 3, you :
· Admit on the phone that you owe anything
· Agree to make a payment
· Or actually pay them anything at all towards that loan. Even R1.
· This is what we call an acknowledgement of debt. And it gives your creditor another three years to hound you!
The minute you do this, the clock starts ticking again for another three years! During which they can keep pestering you, make demands, send summonses, etc.!
They know this! Most people don’t! Make sure you inform yourself!
So, if someone is after you for a debt that goes back years, firstly demand to see the proof of judgement or any other acknowledgement of debt that has been made within the last three years. Secondly, get legal advice from lawyers who specialize in debt from a consumer angle before you do anything or say anything that could give them what they want. (Which is money, and time!)
Don’t assume that if they issue a summons, the court will dismiss it because the three years is up. You have to make that clear to the court.
How much harassment?
Debt collectors are allowed to act in a “reasonable” way to recover the debt. This means they are not allowed to mislead, threaten, abuse, or harass you. Hmm. Who is going to decide? There are subtle ways to intimidate and to mislead. But anyway, here is what they are allowed to do ...
1. They’re allowed to contact you more than once.
2. Ask you for the money politely.
3. Tell you what will happen if you don’t (e.g. to tell you that they have a right to sue you, to recover their legal costs from you, to record the judgement on your credit record thus affecting your ability to get credit)
4. Make arrangements with you for the debt to be repaid.
5. They may get you to sign one of these forms: “Admission of Liability” or “Acknowledgement of Debt” or “Consent to Judgement”.
Caution! Watch out for the last two! Be very careful!
Signing any of these forms gives the debt collector the right to demand money from you on new terms! That have nothing to do with the original loan or purchase! When you sign one of these you give them huge power! You also usually agree that you owe them all the extra administrative charges of the debt-collecting company. These can be absolutely HUGE! They may easily DOUBLE the size of the original debt! Every time they phone you, send you a letter, or even sneeze, they put it on your bill. Then, if you say no to paying this, you could easily end up paying their lawyers’ fees as well. So you may end up paying:
· the original debt
· lots of punitive interest and fees
· the debt-collector's fee
· lawyers’ fees, and any other legal costs.
It’s easy to forget this fact once you’re being confused and stressed by many phone calls and letters, that your debt is with the shop you bought from, and not all the people they employ to get their money for them. So you should not have to pay their costs, such as debt collectors and lawyers. Did you employ them? Did you buy from them? No! Yet people get pushed into paying these costs all the time.
The other danger: the “arrangement”
Creditors know that most people intend to pay their debts and that they want “a clean slate”. So they offer to “help”. Say your repayments are R2000 a month but you can’t afford that. You can afford R1200, however. You feel good – you are paying off your debt and also you can breathe again because the pressure is a bit less.
Well I have a surprise for you!
You are going to pay and pay and pay and pay and then find that the debt itself is still untouched! Why? Because they continue to add loads of interest to your debt, and the R500 a month may not be keeping up with these added interest sums! Your total debt could even be growing!
They’re not being kind allowing you to pay less each month – they are making themselves more money out of you than ever!
What do you do in this situation?
Contact a lawyer who specializes in sorting out consumer debt. Make sure the firm has good credentials. For a fee that should be a lot less than what you will save, they may be able to negotiate a sum lower than what you would otherwise pay. It will be a lump sum and you will have to find a way to come up with it. But it will be worth it because once you pay it, they will make sure (they must make sure! Make sure they make sure!) that they get in return a letter from the company saying the debt is settled “in full and final” settlement, and this will put an end to the debt once and for all.
Take care! You can’t just go to any lawyer. They don’t all do this, or not very well. Find someone who can.
So all of that is what is known as acceptable debt collection practices(!)
What about unacceptable practices?
Anyone trying to recover a debt, whether it’s a debt collector or the collections department of the store you bought from ...
1. Can’t assault you ...
2. intimidate you...
3. harass you ...
4. or trespass on your property. So no, they have no right at all to come to your house. You can throw them out.
5. If they use force to get onto the property – damage the gate, assault you – call the police.
6. They can’t refuse to leave until you give them a cheque. They’re trespassing – call the police.
7. They can’t threaten violence against you or any member of your family.
8. They can’t block access to your property. They can’t park in your driveway and stay there until you pay. Or dump a load of compost in front of your garage door.
9. Once they’ve been asked to leave, they cannot stay ...
10. and they cannot come back.
11. They cannot wear you out with numerous phone calls (e.g. more than two or three per week).
12. They cannot phone very early in the morning or very late at night unless you agree.
13. They cannot use abusive, racist, obscene language.
14. They cannot humiliate you.
15. They cannot embarrass you on front of others ...
16. or involve other people like your neighbors, in-laws, colleagues or boss.
17. They cannot threaten to tell other people about it.
18. They cannot contact you at work if you ask them not to and if you give them an alternative method for contacting you.
19. They cannot talk to your children about it ...
20. or use your children to threaten you.
21. They cannot lie or mislead you.
22. They cannot say your debt is a criminal offence and that you could go to jail or get arrested.
23. They cannot say your children will be taken away from you.
24. They cannot show you notices that are designed to look like legal or court documents (e.g. a summons). If they do, keep it, and contact the Law Society about it.
Shocking, hey? Yet the length of this list suggests that all of these things have been done by unscrupulous debt collectors. Just so you know.
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