Welcome to the FCM SA Workshop - 17 May 2017 Opening and Welcome - Dr Tjaart van der Walt co Founding Director Global Credit Management Practitioners Keynote address - Frans Haupt Director UP Law Clinic
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The characters in the case study Susan Debtor AB Credit Grantor XY Tracing Agent Atu orneys Inc Wheels Bank Debt Counsellor
CAVEAT The case study is peppered with Gremlins. Some Gremlins caused more Gremlins and some are in the case study because they were (un)intentional. The Gremlins were found in real cases, in your files and some were offered to the FCM SA when we solicited Gremlins from you. OBJECTIVE Find and fix the Gremlins AWARDS Delegates who find the most (serious) Gremlins, might be awarded with some “old” grape juice. (thanks to AfriGIS)
03/12/2010 Susan Debtor applied for a loan, from AB Credit Grantor , for “house renovations” in the amount of R 8,050. Susan Debtor offered to repay the loan over 6 months, as she is a single mother with 1 child.
Susan Debtor heard in the news about the NCA. Susan Debtor requested the loans officer, at AB Credit Grantor , to supply her with their NCR registration. The reply Susan Debtor got was that AB Credit Grantor only have 20 loan agreements: totalling R 50,000 in their portfolio, hence they don’t have to be registered with the NCR .
AB Credit Grantor does not have a credit bureau contract to buy consumer profile data, they opted to use XY Tracing Agent that claims that they are re-sellers of data from all credit bureaus. XY Tracing Agent charged AB Credit Grantor R 70 for Susan Debtor’s payment profile.
06/12/2010 AB Credit Grantor granted the loan to Susan Debtor on the following terms: Installments: 6 equal monthly - starting 04/01/2011. Interest rate: 5% per month. AB Credit Grantor never sent any data to any credit bureau as they claimed they are a small outfit and don't know what to send, how to send, and in what format, any information to a credit bureau.
Susan Debtor absconded without making any payments and AB Credit Grantor could not get hold of her. All letters sent to the address of Susan Debtor came back marked “no such person”. 04/07/2011 AB Credit Grantor handed over the loan of Susan Debtor to XY Tracing Agent to collect the amount outstanding of R12,077 made up as follows: Loan R 8,050 Bureau fees R 70 Initiation fee R 870 Service fee R 300 (R 50 pm for the 6 months) Interest R 2,787 (5% pm for the 6 months)
01/08/2011 XY Tracing Agent traced Susan Debtor and sent her a Final Letter of Demand. XY Tracing Agent , in reply to a request from Susan Debtor to provide her with their Debt Collectors registration number, said that they never receive monies from debtors and does not have to be registered with the Council for Debt Collectors. 22/08/2011 Susan Debtor paid R 300 to XY Tracing Agent and once again absconded.
31/08/2011 The account was handed back to AB Credit Grantor by XY Tracing Agent with the following statement: 04/07/2011 Capital handed over R 12,077 01/08/2011 Tracing Fees R 309 (MC Court Rules) 01/08/2011 Final Demand R 17 (Anex B of DC Act) 22/08/2011 Minus: Payment (R 300) 31/08/2011 Interest R 308 (15 ,5% pa) (03/07/2011 - 31/08/2011) 31/08/2011 10% collection fee R 1,207 (penalty for withdrawal of account) TOTAL R13,618
01/09/2011 AB Credit Grantor paid XY Tracing Agent in the amount of R1,233 made up as follows: Tracing Fee R 309 Final Demand R 17 10% fee R 1,207 Minus: Payment (R 300) Balance R 1,233 AB Credit Grantor then debited the account of Susan Debtor with the amount paid to XY Tracing Agent . AB Credit Grantor made a note on the account “written off”. Again no data was submitted to a credit bureau.
02/10/2015 Susan Debtor, now married in community of property, again approached AB Credit Grantor and requested a loan of R3,000 to pay school fees for her child. AB Credit Grantor’s office in Pretoria, verbally offered a new loan of R 25,061 which included the balance of the previous loan of R 13,618 plus R 8,443 (interest from 01/09/2011 - 02/10/2015) a total of R 22,061, to settle same, and the balance will then go towards the “school fees” amount.
Susan Debtor accepted the loan offer and she signed an agreement for R 25,061 repayable over a period of 12 months at a rate of 36,5% pa (RR being 7.5%) as from 01/11/2015. Susan Debtor, at the time of signing the new agreement, indicated income and expenses as follows: Income p.m. Salary R 6,650 (at DTI) Casual Wage R 1,000 (waiter at Foodies) Expenses p.m. Boarding at parents R 2,000 Taxes etc R 650 Fuel R 300 D/O Wheels Bank R 1,200
Susan Debtor’s contract with AB Credit Grantor included the following charges: Initiation fee R 1,050 charged once off Credit Life R 1,350 charged once off for the full 12 month term Service fee R 60 charged per month for 12 months Debit Order R 6 charged per month for 12 months 02/11/2015 Susan Debtor paid her November 2015 installment in full. 01/12/2015 Susan Debtor paid her December 2015 installment in full.
04/01/2016 Susan Debtor absconded and left her full and part time employment. She also left her parents home without leaving a forwarding address. 29/01/2016 AB Credit Grantor handed over the account to Atu orneys Inc for collection.
10/02/2016 A section 129 was sent by A tu orneys Inc on behalf of AB Credit Grantor , by registered mail, to Susan Debtor, together with a letter of demand in the amount of R 29,046 made up as follows: 5/09/2015 Capital handed over R 25,354 Initiation fee R 1,050 Insurance R 840 Service fee R 120 Interest R 1,682 (36,5% pa) (for 60 days) 25/02/2016 Susan Debtor did not respond to the 129.
15/03/2016 Atu orneys Inc issued a summons, from the Pretoria Magistrates Court. 22/03/2016 Summons could not be served on Susan Debtor by the Sherriff as she left her address. 28/03/2016 Atu orneys Inc instructed XY Tracing Agent to trace Susan Debtor.
05/04/2016 XY Tracing Agent traced Susan Debtor, now living in Put-Sonder-Water, at fee of R 350 on instructions of Atu orneys Inc . 12/04/2016 Summons now served on Susan Debtor by the Sherriff.
15/04/2016 Susan Debtor, on receipt of the summons, signed a section 58 consenting to a judgement and EAO to re-pay the judgement debt in monthly installments of R 2,500. Susan Debtor’s sister was requested by A tu orneys Inc , on behalf of AB Credit Grantor , to conclude an AOD for the debt owing by Susan Debtor to AB Credit Grantor . This was done and the sister now stands surety.
22/05/2016 Susan Debtor, knowing she has financial issues, went to see a Debt Counselor . The 17.1 was sent by the Debt Counselor to AB Credit Grantor .
22/05/2016 The Debt Counsellor also sent a 17.1 to Wheels Bank , with whom Susan Debtor financed the purchase of a motor vehicle in terms of an installment sale agreement. In addition to the motor vehicle, Susan Debtor also purchased the mandatory comprehensive cover (R400 pm) and 2 value added products, namely, Group Life (R289 pm) and Top up (R 320 pm) cover for the full term of the agreement and paid for by Wheels Bank on her behalf on a monthly basis. In addition to her vehicle installment amount, these two premiums are also debited to Susan Debtor’s vehicle account on a monthly basis.
23/5/2016 Wheels Bank sent a COB to Debt Counselor stating the following: 1. Monthly Instalment (excluding credit provider insurance) R 2 200 2. Mandatory comprehensive cover R 400 3. Group life cover R 89 4. Top Up cover R 120
06/06/2016 The Debt Counsellor sent a proposal to Wheels Bank for reduced monthly installments of R 1 600 at an extended repayment term, but does not make any provision for the insurance premiums in the proposal. 08/06/2016 As a result, Wheels Bank sends Debt Counselor a counter proposal for a total repayment amount of R2,209 pm. These premiums should have been specified in the proposal under the “extra & charges” column and the amounts should have been added to the R 1,600, thereby totaling a proposal of R 2,209.
08/06/2016 AB Credit Grantor requested the balance from Atu orneys Inc in order to complete the COB to the Debt Counselor . A tu orneys Inc supplied the following information to AB Credit Grantor :
29/01/2016 Capital R 25,354 Interest R 1,682 (36,5% pa for 60 days) Initiation fee R 1,050 Insurance R 840 Service fee R 300 (R60 pm for 5 months) 10/02/2016 Letter of Demand R 36 Sec 129 notice R 36 15/03/2016 Summons R 404 Sherriff R 510 (3 attempts to serve) 05/04/2016 Tracing fee R 350 12/04/2016 Sherriff R 170 (served summons) 15/04/2016 Judgement R 309 08/06/2016 Interest R 944 (36,5% pa for 30 days) BALANCE R 31,985
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