Collecting debts owed to you or your company:

Collecting debts owed to you or your company:

Debt collection in South Africa has become nothing short of a nightmare for those who are merely attempting to collect what is rightfully due to them. This is due to a number of reasons, not the least of which is the National Credit Act, which places enormous responsibilities on you, who wishes to collect debts from others.

When a customer fails to pay you, your credit application form becomes of utmost importance. This is so because the terms and conditions contained therein generally form the basis for your claim. Furthermore, certain dire penalties may be awaiting you if your terms and conditions failed to comply with the Consumer Protection Act and the National Credit Act eg. Not sending out a letter of demand that complies with the National Credit Act (please see our posts on the CPA and NCA for further information in this regard).

HINT: One clause in a credit agreement which importance cannot be over stated is a surety clause. This clause, if adequately drafted, will enable you to sue the surety in the event that the company cannot pay, is liquidated or under business rescue. Eg. If Piet Pompies Paper Enterprises CC enters into an agreement with you for the supply of paper. You duly deliver the paper and upon invoice, you find out that Piet Pompies Paper Enterprises CC has gone bankrupt and the liquidator has sold your paper to cover costs. Instituting a claim against the CC may result in you incurring even further costs. What now? If you had a proper surety clause in your agreement- you can sue the surety in his personal capacity.

A very important consideration in a credit application form is the interest payable on overdue and arrear amounts. This is paramount when determining whether your agreement complies with the NCA and the CPA as well as determining the amount of interest due to you on over-due amounts.

HINT: Another important clause to include is that the debtor is liable for attorney fees in the event that you have to take legal action against them. This clause must be phrased adequately in order to be enforceable against the debtor. Generally, the loser of a court battle is ordered to pay the costs. Please note that even if a party is ordered to pay the costs, these costs are “taxed” costs. This means, that eg. The court only allows “taxed” costs for a letter in the amount of eg. R 50. However, your lawyer charges R 900 for a letter. The loser will generally only be ordered to pay the R 50. The other R 850 would be “attorney and own client” costs- which you will remain liable for. Therefore, including an adequately phrased clause as to legal costs is of utmost importance!

HINT: In the event that a debtor offers to pay off the debt in installments, it is a good idea to obtain some form of security over the debt eg via pledge, session or a notarial bond. Another good option to secure the debt owed to you would be a signed “Acknowledgement of Debt” (AOD). We are inundated with clients who present us with a personally drafted “Acknowledgement of Debt” and more often than not, due to unfamiliarity with the workings of the law, the AOD is not worth the paper it’s written on.

Whenever you enter into agreements or provide goods to another on credit (even if the terms are strictly 30 days- this still amounts to providing credit!) it is always a good idea to ensure that your agreements and actions  comply with all relevant laws and that in the event that you are not paid for your goods or services, that you are adequately protected and can get your money back!


For more information on Sequestration or Debt Rescue for individuals (which is beyond the scope of this Article), please see our blog at


Contact us today for help collecting your debts, ensuring that your Terms and Conditions comply with the NCA and CPA as well as making sure your Acknowledgement of Debts are air right! Set up your consultation at or on 012 754 3385. Our consultations may be done in person (after lock-down) or at any time, with set appointment online via Skype.

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