# Regulatory Compliance Category > National Credit Act Forum > [Question] Sale of Debt book

## pierre.aurel

Hi All,

Could anyone offer me their insight to the following; *Sale of debt.*

I may waffle on a bit here, but these are some points that have had me thinking recently and can't find the right information available on the internet.

Lets assume a service provider or similar credit provider has a number of debtors, if this said service provider wishes to sell their debt book on to a collection agency rather than manage the debt collection themselves;

1) Is the service provider allowed to distance themselves totally from the debt and allow a third party to now 'own' that debt and collect thereafter?
_eg: ABC Books has a debt book to the value of R250,000. ABC sells the debt to a collector for R xxx.xxx and then ABC has in essence received a settlement for their existing debt.
_
2) Can the collector now pursue payment arrangement with debtors, if so what procedure or practise should be followed? LOD's etc...

3) What fee's costs may the Collector add to the debtors existing balance?

4) What interest rates may the collector set?

5) Would ABC Books be allowed to sell the debt to any bidder ("the baseball bat stereotypes") or only a legal entity such as an attorney firm?

6) Is ABC Books allowed to accept an offer that is higher than the value of the debt? _Eg: a bidder offers ABC Books an amount of R275,000. R25,000 more than the amount ABC require..._ I am curious to know if the collector can offset this inflated cost to the debtors...

7) What are the legal requirements for ABC to sell their debt book? Do they need the debtors consent / acknowledgement or just notify debtor with a letter via mail(registered)?

8) Can anyone sell their debt book? Eg: a Vet that offered 'incidental credit'

9) Lastly, are there any considerations to make between the date of engagement... _Eg: how does a credit agreement (or more specifically the sale of debt) differ between pre and post NCA Act?_ 


I know I raise a range of questions and issues here, but please feel free to add your bit, no matter how detailed or complex the reply. Happy to learn more about this process and would appreciate the help.

Thanks
Pierre

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## Dave A

Some interesting questions in there.

In terms of transferring ownership of the debt, I've seen contracts with clauses that specifically grant the creditor the power to do this. What I can't confirm is what the position might be without such a clause being present in the original contract.

One thing I am pretty sure of is that the new owner could not alter the terms of the original contract without the consent of the debtor.

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## wynn

Have a look at a few of the factoring houses/organisations, cant think of any links just now.

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## SkyWalker42

My understanding is that when a debt collector (or anyone) buys your debt from the original creditor, that debt is settled.  They settled it for you but you are unaware of it. Then they call you, and that first call is most crucial to them.
They then get you to admit that you owe them the debt, and when you  do its game over for you. You should actually tell them: "Thanks, for settling my debt, I owe you a beer"  :Big Grin: 
There is no contract between you and this debt collector, but they will make it sound like you still owe the original creditor, and they are just collecting on behalf of them. Of course this can be the case, I mean that they didn't buy the debt, but there is much less money to be made, because when they buy the debt they buy it at 2 to 10 cents on the Rand.
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FROM ANOTHER FORUM:wise haven   31-12-2008, 02:36 AM
Thing is, you do not owe 3 mobile any money - they have already been paid, so the company you had a contract with has had the debt satisfied, when the debt company bought it. Balance = zero.

The debt collection company has "bet" on being able to reclaim the purchase price from you. problem for them is, as the other posters have stated; you have no contract with them.

What you are doing is asking for Verification of Debt with a request for Proof of Claim. It is a conditional acceptance, which keeps you in "honour" should it go before the court.

I accept your request for payment upon proof of claim of the debt as stated. Please provide me with the following;
1. Verification of debt, including full bookkeeping records.
2. A contract between you and me, establishing a debt, signed by both parties.
3. A bill signed by you, under full commercial liability of perjury.

Send it to the C.E.O.
Have it registered for proof of delivery.
Give them 10 days to reply.
If you do not receive a reply in that time, send a 2nd "notice".
If nothing after 10 days, send them a notice of default and claim estoppal by acquiescence and the matter is resolved.

That is the dogs bollocks yozhik - sound advice  :Smile: 
===================================

Have a look at this manual....
Debt Collectors Training Manual

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## Dave A

:Hmmm:  Old thread. Rereading it now, if the company didn't so much sell the debt as appoint the "buyer" as an agent, the whole _no contract_ angle goes down the drain.

I'd also be careful of relying on foreign law (in this case UK) for SA situations.

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## garthu

Agreed, not to sure i would take it as "the way it is" but it really is an interesting argument and sounds like it could have some real ground.

I'm just wondering if its not the reason the collectors for Telkom backed of me so easily and with out providing the docs i requested. Long story, but in a nutshell it was paid to another collector, yet another collector became involved later and i refused to be "helpful" when they asked me to prove i had paid since i didnt feel like digging out docs from years ago and simply disputed it and told them to prove there case... we hear from them still every 6 months / year or so, but it never progress's past that point.

If they new or thought they had a leg to stand on, it would have become far more aggressive by now since is that is there business! in fact they could have easily and successfully blacklisted by now if they were on the right side  :Cool:

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