Debt Collection

According to a 2014 survey, South Africans are currently paying approximately 76% of their income on debt. This indicates that South Africa has a debt, as well as a debtors problem. In this financial climate, businesses, small and large alike, cannot afford to let their debtors’ books spiral out of control. Swift handover of outstanding amounts to an Attorney, is the most effective manner in which to ensure that a maximum of overdue accounts are collected.

The team at Tsamosi Attorneys are skilled can provide the services of both:

  • Debt Collector/ Collection Agent;
  • Debt Collection Attorney.
  • Vetting of Debtors via available Credit Bureau information;
  • Listing of defaults on Credit Bureau (where applicable);
  • Drafting Letter of Demand;
  • Contacting Debtor Telephonically;
  • SMS reminders to pay;
  • Drafting Acknowledgement of Debt;
  • Tracing (via Credit Bureaus);
  • Drafting and Issue of Summons;
  • Applying for Default Judgment;
  • Applying for Summary Judgment;
  • Litigation in Defended Actions all the way to Trial;
  • Preparation of Warrant of Execution;
  • Ensuring that goods are properly executed against;
  • Section 65 (Debtors’ Court);
  • Applications to Declare Immovable Property Executable.

For the purposes of clarity, it is convenient to divide the field of Debt Collection into two groups, namely:

To ensure that debt is recovered as efficiently and quickly as possible, it is imperative that a coherent mix of soft and hard collections be followed. You therefore need to ensure that a strategy is put in place to minimise bad debt, and improve your cashflow. At Tsamosi Attorneys we have put processes in place to enable us to take care of both your Soft and Hard Collections. This ensures that no time is wasted in handover from Collection Agents to Attorneys. We have further structured our processes to ensure a maximum file turnaround in minimum time.

Soft Collections:

Soft collections are a term used to describe the collection of bad debt by means other than legal action. This process is implemented before legal action is instituted as a last effort to collect monies due quicker and at a lower cost.

Before the soft collection phase may commence it is often necessary to trace a debtor, Tsamosi Attorneys offer this additional service of tracing and we ensure that each matter handed over is vetted. The vetting process looks at the feasibility of the handover in focussing on the debtor’s means and credit record.

This is an important tool and may prevent that the client unnecessarily wastes money in pursuing a debt which is not collectable.

Process:

A matter is normally in a soft collection phase for a month (30 days) however, this is depending on the client’s preference. The following steps and tools are used in this phase:

  • Step 1 – SMS sent to inform the debtor that he/she has been handed over
  • Step 2 – Telephone call made to debtor to introduce ourselves and attempt to elicit a promise to pay (PTP)
  • Step 3 – Email to confirm the conversation/arrangement.
  • Step 4 – Acknowledgement of debt is drafted and sent to the debtor when applicable
  • Step 5 – SMS before PTP date
  • Step 6 – Email reminder of PTP date
  • Step 7 – When payment is received into our trust account, payment will be made to client within 5 days. Should a PTP not be made, a letter of demand will be sent via email and registered post and the matter will proceed to legal action.

Hard Collections:

Hard collection is a term used to describe the collection of amounts owed by means of legal action, therefore by issuing either a summons or liquidation/ sequestration application. This process is implemented after soft collection attempts have failed and there are no prospects of payment being made of the debtor’s own volition.
Once the matter is handed over for hard collection the process is initiated by drafting and issue of the summons in preparation of service thereof on the debtor. The letter of demand is usually sent to the debtor during the soft collection phase in order to expedite the matter.

This letter affords the debtor 10 weekdays to respond, failing which formal legal action is instituted. The process and steps utilized is fully set out below in our FAQ’s and Steps Followed in Legal Action.