Lesson 1, Topic 1
In Progress

4.2. Business tips: the litigation process for debt recovery.

ryanrori January 20, 2021

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This section outlines when it may be necessary to institute legal action as well as how to go about doing it. We shall be looking at who the plaintiff is and who the defendant is as well as the role of the court.

We will also take a look at some of the legal documents one might need when instituting an action in the Magistrates’ Court for collecting on debt and the process one would follow for placing an emolument attachment order on a debtor’s salary.

When to Handover an Account to an Attorney

A debt collector should always try to consult with a debtor in order to negotiate an acceptable arrangement as to when the overdue amount will be paid. However, as you may know, this is not always the case. The debt collector may then need to explore more drastic measures in its endeavor to recover any overdue amounts.

Should the debt collector not feel able or experienced enough to proceed further, then it may be in his/her best interest to hand over the matter to a more experienced person such as an attorney. This should only be done as a last resort if the debt collector has exhausted all reasonable attempts to recover the outstanding balance. Below are some of the main differences between an attorney and a debt collector.

AttorneyDebt Collector
Begins with legal process immediately.Will negotiate a Point to Point (PTP) with debtor.
Gets paid regardless of results.Payment is based on what is collected.
Are not always effective at finding missing debtors.Experienced at tracing missing debtors.
Will usually advise the credit provider of options available and let him/her make a decision.Will often pursue the debtor via any possible legal means.

The National Credit Act indicates that a credit provider may begin with legal proceedings as early as twenty days of the consumer being in arrears. However, this may only be done via the correct channels. Section 129 of the Act places an obligation on a credit provider to notify the consumer of its intention to hand him/her over for the commencement of legal proceedings prior to doing so.

Simultaneously, the credit provider must advise the consumer of his/her right to visit a debt counsellor. Should the consumer after ten days not have applied for a debt review with a debt counsellor, the credit provider may then proceed with further legal action. In a case where the consumer has applied for a debt review no legal action may be taken until it has been found by a court or a debt counsellor that the person is not over-indebted.