Thursday 4 December 2008

More bad debt?

In late October this column was entitled “Bad debt” and told the story of a debt collection case that had gone wrong.

A customer had bought things on credit from Game Stores and ended up having difficulties making the payments. Her debt ended up being passed over to a debt collector to pursue.

So far there’s nothing wrong with this situation. Stores have a right to chase the money they are owed, just as you and I do. They are perfectly entitled to engage debt collectors and are just as entitled to take court action and seize goods if it’s done according to the rules. Our issue wasn’t an objection to debt collection, just the way this particular debt collector handled it.

The problem was that the customer wanted a statement detailing how much she owed. That shouldn’t be too hard, should it? That should be the sort of thing debt collectors do all the time, surely? A customer is perfectly entitled to regular statements, showing how much they owed, how much they paid and the balance. I don’t see how anyone could object to that.

Well, the debt collector did. There’s no point going over the details of the story, you can see that on our web site. What happened next is interesting.

The debt collector engaged her lawyers to write to the customer’s lawyers and deny everything. So far, so good. However, the letter ended by referring to the article we wrote in Mmegi about the situation. The letter said that the article “is defamatory and action will be taken against your client.”

Against the consumer trying to pay off her debt? How would that work? She didn’t write the article, I did. If they want to threaten someone they should be threatening us, not the consumer. Unless perhaps they think that the consumer is more likely to be intimidated by a lawyer’s letter than we are? That’s likely because we’re NOT threatened. We didn’t defame anyone, we reported the facts of the case as reported to us and the phone calls we had with the debt collector. So threatening us is a waste of ink.

The consumer DID eventually get a statement although it was so difficult to read she’s none the wiser. All she can see is that even after paying off over P10,000 against an original debt of around P9,000 the statement claims she still owes another P11,000 in unexplained charges. She has a right to an explanation.

But the issues remain the same. Why should debt collectors make life so difficult for consumers who acknowledge their debts and make every effort to repay them? Why should debt collectors be so rude? Why do Game seem to care so little about the way their debt collectors operate? When we spoke to Game their response was that she shouldn’t have got into debt in the first place. Well, obviously but life isn’t that simple. People DO get into debt but some of them then do their utmost to settle the debt. Why punish the honest ones?

Then we got another call about a similar situation. Same store, same debt collector. Of course this doesn’t mean anything, the second consumer had read the article, she recognised a similar story and that prompted her to contact us.

She also had a debt with Game, the same debt collector was engaged and the consumer paid off everything. She also couldn’t get a statement but despite this she managed to pay what was demanded. But this year when she applied for a loan she was turned down because her TransUnion record showed she still owed the money. The bank showed her the TransUnion report that said that the debt to Game had been “written off”. Not repaid, written off. Cancelled in other words. How could that be when she had repaid it in full? She contacted Game and they admitted her record was wrong and have promised to correct it but that’s quite a curious mistake don’t you think? A consumer repays a debt but the store thinks it hasn’t been repaid and even goes as far as saying that in the TransUnion record? How could that have happened? The consumer has all the receipts and her bank statements that show the money was paid over to the debt collector so it’s not the consumer’s mistake.

The good news is that once the consumer spoke to Game, they confirmed that once they’ve confirmed with the debt collector that everything is in order, they will remove the consumer’s record regarding this incident from TransUnion completely.

So what’s the lesson from all of this?

  1. Don’t buy on credit AT ALL if you can possibly avoid it.
  2. If you DO have to buy on credit then don’t default on your payments.
  3. If you DO default recognise that you are going to pay back a LOT more than you first thought.
  4. Keep records of everything you pay.
  5. Get someone you trust to do the maths for you and confirm that you are paying what you really owe.
  6. Demand details of the penalty charges, collection fees and legal costs they demand.
  7. Once you’ve finished paying demand a letter from the store confirming that you have repaid the debt in full.
  8. Check your TransUnion record.
  9. If there’s the slightest problem, contact us and we’ll listen.
  10. Never forget, even bad debtors have rights.

This week’s stars!
  • The tender team at the Tertiary Education Council for outstanding service.
  • Nkhwinya Lewanika at Gaborone City Council for friendly, helpful, knowledgeable service.
  • BotswanaCraft Marketing for providing a great venue for an exhibition, in particular for Nicola for being “second to none”.

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