Posted by: | 2016/06/13 11:14
I have been trying to pay off old debts but the ongoing interest and collection fees are killing me. In some cases, the amounts are now three times what the original debt was. Is there a limit to the amount of interest and collection fees the debtor can be charged ?
Posted by: Renée Marais | 2016/06/22 22:11
Yes there is a limit. It is called in duplum and described in the National Credit Act for debt after 2007 under section 103(5). It is confirmed for debt outside of the National Credit Act in the Constitutional Court Ruling in the case of Paulsen vs Slipknot. The amount collectable for debt is to be doubled at the date of default (which means the day you stopped making payments or paid less than the required contractual amount). For an example if you borrowed R1000 and the interest and costs were calculated to an amount of R200 the amount owed is R1200 to be paid back to the creditor @ R100 per months X 12 months. You made payments for 6 months and paid off R600 (E.g. R500 principal debt + R50 interest and R50 costs and fees) and you still owe R600. You default on the payment, the amount to be repaid is R600 under the contract. That may only double to R1200 and nothing more.
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