Consider the situation in which you carry out work for a client, at your own cost and expense, only to receive excuse upon excuse as to why the client cannot pay the invoice which you’ve furnished them with. So what do you do when such a client does not pay your account for services rendered and your own amicable attempts have failed?

If the debt is relatively high or the debtor is exceptionally recalcitrant, the best course of action would be to appoint a professional debt collector.

The law

The National Debt Collection Act 114 of 1998 provides for the definition of who may practice as a debt collector. In terms of the Act, any attorney, or his agent, or a registered debt collector may act as a debt collector and can only collect the capital amount plus lawful interest as well as their fee.

Usually a debt collector would consult with the debtor in an attempt to negotiate the overdue amount or some sort of payment plan towards this amount. A debt collector may in some circumstances save money over an attorney by not entering into litigation in an attempt to resolve the debt as soon as practically possible.

The problem arises due to the fact that at the point when a debt collector has been appointed, most debtors have already abstained from paying their debt in a bona fide manner and thus the persuasion from a debt collector is usually futile. As a last resort, attorneys are usually appointed to enter into litigation in an attempt to obtain judgement against a debtor.

The Process

Once an attorney enters into litigation, one of two possibilities arise:

1. The debtor will choose to defend the action or;
2. The debtor ignores/chooses not to do anything;

When defended, the litigation process becomes a lot more complicated, timeous and costly. The process differs on a case-by-case basis and as such this will not be discussed in this article.

When the debtor does not defend, the below is an exposition of exactly how the procedure takes form.

1. Demand Letter – A letter of demand is usually sent out to the debtor, placing him on terms to pay his debt, failing which, it advises that further legal action will take place;
2. Summons – Summons is then drafted, issued and served on the debtor providing him the opportunity to place his case before court. (in our example, the debtor chooses not to respond to the summons);
3. Default Judgement – As the debtor has failed to defend the matter within the prescribed period, judgement in default will be sought against the debtor.
4. Remedies/Avenues – once judgement has been obtained, this judgement is valid for a period of 30 years. This judgement will also appear on the credit bureau’s database. Follow up remedies include them settling the debt, obtaining a warrant against property, a garnishee order on their salary or a Section 65 enquiry into their financial situation as to why payment cannot be made.

Final Word

It is important to choose your debt collector carefully as to obtain the best settlement or payment possible. In the event that you find yourself struggling to have invoices or credits owing paid to you, give us a call and we will provide you with the assistance and advices to best suit your needs and to provide punctual, professional and personal assistance.