As if debt collection wasn’t already hard enough, it gets even more difficult when you attempt to collect from customers internationally. In these situations, you have to respect the collection laws of the country you are attempting to collect in. Many times, that means that you have to first educate yourself about what those laws are!
International debt collection can be a real hassle for anyone who is trying to run a business, but by simply being aware of the rules in regulations in the county your debtor resides, you can go a long way towards determining if you need to bring in an expert or not.
Residents of South Africa
South Africa is a country with a population of about 54 million people where debt is a way of life. At one point, it was estimated that as much as 75% of the average household income there goes towards debt servicing payments. They have more than 4,500 domestic companies that issue credit to more than 23 million citizens who speak one of 11 national languages.
With lots of debtors, lots of debt collectors, and lots of language barriers, there can be quite a few roadblocks ahead of you if you are looking to recoup an outstanding balanced owed to you by someone in South Africa.
Debt Collection in South Africa
As far as their friendliness towards creditors attempting to collect on outstanding debts, South Africa is actually somewhere in the middle of the road. They have some rules in place that you are definitely going to want to follow, but those rules are all pretty reasonable.
Debt collection in South Africa is regulated by their National Debt Collection Act 114, which was passed in 1998. It states that any collection agencies operating in the country must register with the Council for Debt Collectors.
It also splits the collection process into pre-legal and legal collections. Pre-legal collections are handled by collection agencies, and legal collections are ones that have moved into the courts and are now being handled by attorneys.
Illegal Collection Tactics
In addition to establishing the Council for Debt Collectors, the National Debt Collection Act 114 also restricts many of the same actions that are forbidden by the Consumer Debt Protection Act here in the United States.
Debt collectors are not allowed to use any type of force or threats of violence to coerce debtors into making payments. They also cannot threaten to pass details of a debtor’s situation onto their employer in an attempt to ruin their careers.
Collectors must also refrain from serving false documents, impersonating police officers or officers of the court, and spreading false information about a debtor.
The National Debt Collection Act 114 also states that all debt collectors must follow certain guidelines with regards to the amount they are allowed to charge as fees for late payments on outstanding debts.
Debtor Disputes and Complaints
If a debtor in South Africa wants to dispute a particular debt, they can file a complaint with the Debt Collectors Council. When this happens, the collection agency must then provide adequate documentation of the debt. While a dispute is ongoing, the debtor does not have to make any payments.
International debt collection in South Africa is definitely not as complicated as some of the countries that we have looked at, but you still have to know the rules of the game you are playing. In many cases, it might serve you better to focus on your existing business and leave the details to a commercial debt collection agency.