Everything You Need to Know About Debt Collection

Introduction

OAK Law offers a cost-effective approach to recovering outstanding debt owed. We specialise in pre-legal collection, wherein the debtor is contacted via multiple communication channels in order to establish contact and obtain payment or enter into an arrangement for the debt to be settled as soon as possible. Should a payment arrangement be concluded we ensure that payments are adhered to timeously and recorded in writing to ensure our client’s rights are secured.

Should initial efforts not lead to a favourable outcome, our experienced team can assist with litigation based debt collection which aims to recover outstanding debt via formal litigation process.

What is debt collection?

Debt collection is the process of pursuing payments of outstanding amounts owed to a credit. OAK Law’s debt collection services includes the following:

• Establishing contact and creating rapport with the debtor(s) to facilitate payment.
• Negotiating with debtors to reach amenable settlement arrangement for payment of the outstanding debt.
• Ensuring adherence with payment arrangements, alternatively enforcement of settlement arrangements defaulted on.
• Tracing of debtors that prove to be illusive and/or evasive.
• The instituting of legal proceedings in the relevant High Court/Magistrates Court or forum including arbitration.
• The collection of debt secured by way of order of court through the appropriate legal process i.e. the execution of a warrant whereby the debtors assets will be attached by the Sheriff and sold at auction

How Does Debt Collection Work?

Pre-legal phase:

• Contacting debtor to alert the debtor of the outstanding debt and urgency of prompt payment.
• Continuous pressure is applied on the debtor to settle the account immediately.
• Should the debtor fail to make any payments or suitable payment arrangements during the pre-legal phase, the client will be notified and may opt to proceed to the next phase of the debt collection process.

Letter of Demand:

• First step in the litigation process whereby a formal letter is sent to the debtor demanding payment on or before a certain date with the indication to proceed with legal action should payment not be made.
• OAK Law will continue to apply pressure on the debtor throughout this phase via various mediums.
• Should the debtor fail to make any payments or payment arrangements during the Letter of Demand phase, the client will be notified and may opt to proceed to the next phase of the debt collection process.

Summons:

• A summons is drafted, issued at court, and served on the debtor by a Sheriff of the courts.
• The debtor is provided with 10 business days to defend the action, failing which, legal action will proceed undefended
• Should the debtor defend the action at this stage the matter will proceed according to the court process including discovery, pre-trial and trial proceedings.
• Should the debtor fail to respond to the Summons within 10 business days, the client may opt to proceed with a Default Judgement against the debtor.

Application for Default Judgement:

• The Default Judgement is drafted and lodged at court where we will be provided with a date on which the hearing of same will take place.
• Once the Default Judgement is granted, the client is provided with a court order that prescribes after 30 years, allowing the client to collect the debt at any time within said 30 years. The debtor is also informed of the granted order against them.
• The court also proceeds to notify all credit bureaus of the granted order, thereby effectively “blacklisting” the debtor. The debtor can only remove said “blacklisting” if the debt has been settled.
• Should there be no forthcoming payments, the client may opt to proceed with a Warrant of Execution against the debtor.

Warrant of Execution:

A Warrant is drafted, lodged and issued at court.
Once issued by the court, the Warrant may be sent to the relevant Sheriff to execute, thereby visiting the property of the debtor and creating a list of all the items that can be sold and their respective values. These items may then be sold in an effort to satisfy the outstanding debt.

Who is Debt Collection For?

OAK Law’s debt collection service is for any corporate entity or individual who is desirous of recovering outstanding debts owing to them.

If your company has a large debtors-book, or simply a few debtors, our collection services are provided in a cost- effective manner tailored to our client’s specific needs.

Key Benefits of OAK Law’s debt collection services

The advantages of using our Debt Collection services include, but are not limited to, the efficiency of every phase of the process taking place under one roof. This allows for a seamless process without unnecessary delays and the need to obtain external legal advice and services of other debt collection agencies.

Our team of expert legal professionals have a vast amount of knowledge and experience in providing debt collection services.
Furthermore, your success is our success as we only profit from successfully collecting outstanding debts from debtors. The costs of our debt collection services are cost-effective and only cover the necessary costs of miscellaneous expenses incurred during the collection process which approach is unique to OAK Law.

Frequently Asked Questions (FAQs)

How much does Debt Collection cost?

• OAK LAW’s initial pre-legal stage is free of charge where we consult with client to obtain information and make first contact with Debtor.
• Debtor in some instances settle the Debt with first contact in order to avoid legal proceedings. OAK Law retain a percentage of the debt successfully collected.
• Direct costs will be discussed with client prior to incurring such costs; client can elect at any stage not to proceed. Costs incurred can be recoverable from Debtor.

How long does it take to reach a favourable outcome?

The entire process, should it be necessary to complete same, will take anywhere between 3-6 months.

What would you require to successfully collect from debtors?

• A detailed description of the nature of the debt and how the debt arose;
• A copy of the agreement/documents upon which the claim is based;
• A certificate of balance (COB) on your company letterhead that reflects the total outstanding amount to be collected;
• Any and all proof of the debt owing in the form of invoice(s), statement(s) of account(s), etc;
• The contact details of the debtor, along with all relevant written correspondence with the debtor to date;
• Confirmation of banking details where the recovered amounts are to be paid;

Pros and Cons of OAK Law’s Debt Collection Service

Pros: In-house legal services at a cost-effective manner provided by a team of expert legal professionals.

Cons: The costs required to initiate legal action, however, same can be recovered from the Debtor in the debt recovery process.

How to Get Started with Debt Collection?

Contact our offices and request the debt collection mandate for completion.

Tips for Success: Be sure to collect as much information and documentation as possible and provide us with everything that may be relevant to the outstanding debt.

Conclusion

We strive to provide excellent result-driven advice in a cost-effective manner tailored to our client’s specific needs.
Give us a call on 012 345 3761 or send us an email at info@oaklaw.co.za to enquiry about our services.