Answer to a question from a reader

I am being pursued and threatened for debt on my child's school fees that I cannot pay. What are my options?

The short answer

You have a legal right to a statement of the amount owed and how it was calculated. It is also possible to ask for a discount on the collection fees and apparently this is often granted.

The whole question

I am in dire need of assistance and advise.

My daughter was awarded a bursary in 2015 to attend a boarding school.

The Bursary covered about 75% of the fees in the first year and less in the remaining two years.

My husband was not employed at the time.

Attorneys are harassing me for the remainder of the outstanding fees. The amount for all three years is R22,500.

The fees added to the outstanding amount have now more then doubled the outstanding amount. I have received numerous summons  with additional charges.

My questions are as follows:

  • Is there a limit for additional fees that the debt collector can charge?

  • I have been threatened by the attorneys that I will be arrested if I don’t go to court.

  • Can the school sell my debt to attorneys?

  • What can I do? I cant afford to pay that amount if money. I will be paying forever.

Please assist you advise in this regard will be greatly appreciated.

 

The long answer

Thank you for your email about being pursued by debt collectors for outstanding tuition fees.

Unfortunately the school does have a right to hand over unpaid fees to debt collectors if a parent has not applied for a fee exemption. In other words they can sell your debt to attorneys. It is a strategy to persuade you to pay and avoid the more expensive route of going to court.

Debt collectors are limited by the Debt Collectors Act as to what they can charge. A 2013 article by Angelique Arde in Personal Finance on iol.co.za laid out the additional fees debt collectors can charge, and concluded that they may not charge more than the capital amount of the debt or R814, whichever is lower, but they can additionally charge a 10% commission on every instalment paid to a maximum of R407 per instalment.

She points out that it’s better to be pursued by debt collectors than by attorneys because debt collectors are limited by law as to what they can charge, but attorneys are not.

You may not be threatened or harassed by debt collectors and you can complain to the Council for Debt Collectors if you have been mistreated by a debt collector. You need to make a complaint in writing. You can download a complaints form at www.debtcol-council.co.za and click on “Downloads” on the home page.

You have a legal right to a statement of the amount owed and how it was calculated. It is also possible to ask for a discount on the collection fees and apparently this is often granted, though they can refuse to negotiate.

You do need to go to court if you receive a summons as if you aren’t present to put your side of it, the court could award a money judgment against you by default, which could lead to them putting a garnishee order on your wages.

If possible you should try to contact the creditor listed on the summons and reach a settlement without having to go to court. They may accept a reduced amount in a lump sum or a small series of payments. After your debt is paid, the fact that you had outstanding debt will stay on your credit record for five years, although it will show as “paid off”.

Wishing you the best of luck in getting it sorted out.

Answered on Feb. 27, 2019, 3:42 p.m.

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