Repossessions and Bankruptcy - Live on ANN7 Africa News Network - DSTV channel 405 on 4 December 2013

It's again as Eric been saying for most the morning and this week that the time is here when we need to begin to think about not just ways to keep ourselves safe on the roads and in our homes but also financially. It is of course quite devastating to imagine the amount of people who experience for example repossessions but also in fact bankruptcy. It must be one of the worst things to experience to be put in a position where you suddenly have to say well I can't do this, I don't know how we going to manage and therefore we need to say goodbye to certain things in our lives. Financial stress is one of the worst things that they say that people can experience.

 

In the studio with us now from Credit Intel we have the CEO mister Carl Knight. Thank you for joining us in the studio.

 

Thank you let's talk a little bit about repossession and what it really is and what it means. Well it's quite simple if you don't pay your bond or your vehicle's instalment as well as any other movable assets then eventually someone's going to come along and take it back from you.

Repossessions are rare, they do happen but it is really not in favour anyone to take back any property and then try and resell it to someone else, however it is unfortunately required. You can imagine selling your vehicle to someone and they don't pay you. What are you going to? You have to go and get that vehicle back.

So you will find that repossessors will actually come and knock on your door and try and take the vehicle away from you without any fuss. The best thing is of course to to work together because at the end of the day it's in your favour and even though the property is repossessed, costs will be charged to you.

 

I guess one of the good things about the industry at this time is that it doesn't always have to get to the point of repossession. There are conversations that can be had ahead of repossession if only we took it upon ourselves to actually open a dialogue.

 

Absolutely. As professional debt collectors we have a myriad of different processes which ultimately ends at the sheriff. One of the first steps is if you are in trouble is to actually own up, you have to face it and you have to say look how can we get out of this, and unlike the beliefs of many people we are there to help consumers to actually face the debt, and then we try and help them by making a suitable arrangement for example a monthly payment arrangement.

Of course if you have a vehicle or home which you owe on, you still have to pay your monthly bill plus the arrears or a percentage of the arrears. What one has to understand is that the banks have been very good especially with the last 2008 2009 recession and they've actually helped us tremendously in extending the periods and re rescheduling debt.

 

And then I think the most daunting all of debt accumulation issues is bankruptcy because even though some people should be pleading bankruptcy it seems like the hardest thing ever today. What is it about the term bankruptcy that is so daunting and so scary?

Bankruptcy is in fact just a way of saying let's cut all our losses. Let's start all over. It is unfortunately a necessary evil to protect the market out there because else businesses and people would go on making more and more debt and creditors would be hurt. So if you are in trouble and you owe too many people it is definitely an option to declare bankruptcy so you can do a voluntary sequestration in the case of a person, which lasts for a minimum of five years and then you can apply for rehabilitation. During that period all accounts are frozen and in fact written of entirely but before one gets to bankruptcy there is also a rescue method.

 

I mean they're out there - a business rescue processes that one can get through if that seems to daunting.

 

Of course this is what the Old National Credit Act was about, which is in my personal opinion been very good for market. In terms of preventing future credit bubbles, but the fact is that the National Credit Act really is about firstly for a person going to see a debt counsellor and rescheduling the debts over a period of time, for them to get onto the feet again.

And exactly in a similar fashion on the business side, by a business applying for business rescue. Unfortunately in the market out the be a have been a lot of misconceptions and not everyone is exactly sure the processes and many specific procedures have not been tried through court so their is still a bit of confusion. But we certainly getting ahead and overtime it will prove what is the best way to go. You don't need a system in place to check whether a person is in debt counselling when they apply for credit. The onus is up to the credit seeker to declare it and of course if you if you lie on the application form that's an entirely different story and it can be construed as fraud.

 

Not everyone in fact deliberately goes to apply for credit and then deliberately does not pay. Only a very small percentage of consumers and businesses do that but the truth is that many people get into trouble without realizing it is purely a situation of financial sense. You really need to do your budget every month and say if I'm getting ten thousand Rand in, this is what I can spend.

 

I was just going to ask you: do South Africans live above their means?

 

The sad thing is that we in South Africa are financially illiterate much like many other parts of the world and financial illiteracy far exceeds normal illiteracy so far less people know how to balance their bank account at the in the month than people that can read. Truth is they don't actually teach us these things in school so it is education problem.  But at the end of the day of course it is not that difficult. All you have to do is be able to do is add and subtract.

 

It is that time of year when people are going to be spending and sadly this is when credit cards for example are greatly abused as we as we go into to the festive season.

 

Absolutely, you will still be paying for the next year on the Christmas spend so be very careful when your haul out your card.

 

This is a time where people spend over Christmas because I remember being young and thinking that a 13th cheque was extra money. I soon realized that it wasn't extra money and so you do overspend. Is there a time when people are being passed over to you for debt collection more than any other time?

 

That's a very good question a very interesting question and one that I am fully qualified to on so because we have a cast array of clients from homeowners right through to large corporates. The truth is that there is no specific time when debtors are handed over to us more than others. We do see a bit of a rush before the festive season but the only reason for that is simply because many of our clients do go away over the festive season so they'd like to pass debtors through to us before they go away but that's about the only time, otherwise it's actually constant throughout the year.

 

How often do you have to communicate with someone before you hand them over to the next process?

 

Credit Intel currently have a theoretical 88 step process. It goes straight from you have now been handed over,  right through to emoluments attachment order or warrant of execution stage, do it’s quite a lengthy process. There is a mix of everything from psychology, pleading, begging and getting a bit stronger, especially when it gets to the legal department issuing a summons and things like listing on the bureau's et cetera.

 

It has to be a bit of a frustrating business to some extent to be in for you but particularly for your client when you collect on their behalf, but they are still not getting paid and an 88 step program is a long way to go and it seems as though these obstinate people simply think that it'll go away if they ignore warning letters and calls.

 

Of course often consumers will pay on the first few notices and it doesn't have to go the whole process. If you don't work with the debt collectors it will result in dire consequence. So at the end of the day when a client hands over they do it as a last resort, although we do have early-stage collections that we do as well. The quicker you pay or work with us, the less it is going to cost you, the consumer.

 

Carl Knight, CEO from Credit Intel in the studio with us, just having a chat about debt, as this is the time when we tend to spend more.

 

Of course some people believe that the credit card is just extra money the bank made available to them but sadly you will have to pay this back amongst at the bills that you might be getting over this period of time. It's best just to be vigilant in terms of what it is that you bring in on a monthly basis and what it is that you can let out. There’s nothing worse than someone chasing you for money.

Edited from the computer generated file for factual correctness.

 M