DebtBusters notes with concern Summits’ mystery shopping experience findings, which alleges that some of Lewis’ staff members violated the rules of the National Credit Act (NCA) and charged more than the industry norm when it comes to selling credit life insurance, which it bolted on to a credit application quote.
13 March 2015
- The National Credit Act (NCA) has been gazetted by the South African Government
- The selling and the collection of prescribed debts resulting from credit agreements are now prohibited by The National Credit Act.
- Relief is brought to consumers who find themselves with prescribed debt
Amendments put a stop to Prescribed Debt Collections frenzy – Relief for consumers on the way
The new amendments to The National Credit Act (NCA), gazetted by the South African Government, will finally put a stop to the Prescribed Debt collections frenzy and will have a significant effect on the way prescribed debt is collected and sold.
Over the years, a massive collections industry has grown out of loan books comprising prescribed debts, as it is more profitable for businesses to sell off debtors’ books than writing them off as bad debts.
DebtBusters CEO Ian Wason states, “A debt is considered as ‘prescribed’ if in the past three years the debtor has not made a payment or acknowledged the debt (in writing or verbally), has not received a summons or made a promise to pay off the debt.”
The draft amendments released in 2014 caused a debt collections hype which very quickly spiralled out of control, as debt collectors became aware that selling and collecting prescribed debts would soon be prohibited.
Debt-enforcement agents resorted to tactics such as harassing consumers, the fraudulent use of emolument orders forcing employees to make deductions off employees’ salaries, confiscating borrower’s bank cards, Identity Documents and PIN Codes to withdraw cash from accounts themselves, all in order to collect debts that have expired under the Prescription Act. Collectors moved full steam ahead to get consumers to acknowledge their prescribed debt to interrupt the prescription and place consumers in a position where they are obligated to pay back their debt.
“We have seen a drastic increase in the amount of debt counselling applications over this period of time, as cash strapped consumers threatened by unscrupulous collectors have turned to us for help,” says Wason.
The selling and the collection of prescribed debts resulting from credit agreements are now prohibited by The National Credit Act.
This brings relief to consumers who find themselves with prescribed debt, as prescribed debt can no longer be collected by anyone.
Consumers that receive calls from credit providers or debt collectors for old debt, must know their rights. Those being harassed by debt collectors or struggling to manage their debts should turn to a reputable debt counsellor for help. Debt Counsellors can identify prescribed debt, advise the consumer about their prescribed debt and negotiate with the Credit Provider to get the prescribed debt written off.
“DebtBusters is geared up and ready to assist consumers that continue to be harassed by debt collectors of prescribed debt,” adds Wason. “We anticipate a further increase in the amount of debt counselling applications, as a result of the holistic changes to the National Credit Act. Before debt counselling, DebtBusters clients spend more than 105% of their net income servicing their debt. After DebtBusters has renegotiated their debt with credit providers, consumers generally spend only 30-40% of their net income on debt repayments.”
- A drastic increase in the amount of debt counselling applications has occured, as cash strapped consumers threatened by unscrupulous collectors have turned to us for help
- Before debt counselling, DebtBusters clients spend more than 105% of their net income servicing their debt. After DebtBusters has renegotiated their debt with credit providers, consumers generally spend only 30-40% of their net income on debt repayments