Increasing interest rates and inflation are placing South African consumers between a rock and a hard place, as the cost of servicing their debts increases while the purchasing power of their money decreases. A bill that is more than 90 days past due has approximately a 45 per cent chance of being paid in full. Most people find Debt Collection to be a tedious, time-consuming, and aggravating process. South Africa's most affluent consumers have the highest increasing loan default rate. According to the Experian Consumer Default Index (CDI), the rate of individuals who defaulted on their loans rose sharply in the fourth quarter of 2021.
The Council for Debt Collectors was established by a Congressional Act in order to ensure the equitable collection of debts and provide for the regulation and control of fees charged by debt collectors. The National Debt Collection Act 114 of 1998 regulates the South African debt collection process. Debt collection is when an attorney such as one of our experienced attorneys at Lowe & Petersen Attorneys or a registered debt collector collects, on behalf of the credit provider, an outstanding amount plus lawful interest, admin costs and collection fees, which by law is capped to certain amounts. The Act provides for the exercise of control over the profession of debt collectors and authorises registered debt collectors to recover fees or remuneration. The purpose of the Act is to transform the debt collection system in South Africa by regulating the conduct and professionalism of debt collectors and fostering a culture of good governance within the profession, thereby protecting both the general public and creditors. The Council for Debt Collectors exercises authority over the debt collection profession.
It is essential to comprehend the debt collector's function. They are responsible for collecting debt-related funds. They are given an account to recover the money owed to the credit provider. They will be compensated with a percentage of the amount collected in addition to service fees. A debt collector is only permitted to collect the transaction's principal amount, legal interest, and their administration fee and expenses. The fees are established by the National Council of Credit and Collection Agencies.
