I get quite a few e-mails from people whose previously good credit records have been obliterated as a result of their retrenchment.
They make for incredibly moving and humbling reading.
The last line of Mark van der Byl of Cape Town’s e-mail really tugged at my heartstrings.
“Thanks for all your informative columns,” he wrote.
“I have access to them by virtue of being a newspaper delivery man…”
He lost his previous job in early 2011 and is now “of no fixed abode”.
With his meagre income from casual jobs, he paid off all his overdue accounts, most recently his Woolworths account – or so he thought.
He was aware of the fact that his unpaid account had been handed over to one of Woolworths’ third party debt collectors, MBD Credit Solutions, but had chosen to continue to pay off the debt in instalments at a Woolworths store.
Many people in his position do this, as the retail stores are generally less intimidating than the debt-collecting companies.
In July, Van der Byl made his last payment, including all the accumulated interest, and the store clerk confirmed that the account was paid up; the balance zero.
But a few weeks ago he started getting calls from MBD, saying he still had an outstanding balance to pay on his Woolworths account.
“I was told I was in extreme trouble for not paying collection fees of R1 200, and the caller made vague threats about what was going to happen if I didn’t pay.
“I don’t understand how I can owe money when Woolworths told me I had settled the account.
“Could you advise me?”
I took up the case with MBD, which responded by saying that legal fees of R1 269 were “legally due and payable” by Van der Byl on his Woolworths account.
But because of the “miscommunication” between MBD and its client, Woolworths, and Van der Byl’s “genuine belief” that the account was settled, the company was prepared to write off the legal fees.
As I have come across several cases of such “miscommunication” between retailers and their collectors, particularly when the debtor chooses to pay the retailer, rather than the collector, I took up the case with Woolworths Financial Services.
When Van der Byl paid off the final amount which Woolworths said he owed on his closed account in July, why was he not told that he would still be liable for the collector’s legal fees?
Woolworths said the contact centre agent who dealt with Van der Byl did not notice that the account had been handed over, so she quoted the outstanding amount only.
“The correct process would have been to refer this to Woolworths Financial Services’ recoveries department that would then have contacted MBD regarding any outstanding legal fees due and advise him of the total balance payable.
“As a result of this error, the update that MBD received showed payment, less legal fees.
“For this reason they continued to pursue the outstanding fees.
“We have personally apologised to the customer for this error and our contact centre management is addressing this internal break in process.”
So, if you’re paying off an outstanding debt that has been handed over to a debt-collecting agency, and you’ve chosen to make payments in one of the retailer’s branches, make sure you ask for the full balance outstanding, including all interest and legal fees.
And if you settle that balance, don’t leave without a letter confirming this.
And, before you agree to pay at all, make sure that the debt has not prescribed.
In short, a prescribed retail debt is one pertaining to a debt which you have not made payment on in more than three years, have not acknowledged in any way in that time and have not been summonsed in respect of.
Thanks to the Prescription Act, you are not liable to pay a prescribed debt if you raise prescription as a defence, nor can a prescribed debt be listed with a credit bureau. - Pretoria News