South Africans with debt face illegal collection tactics

With millions of South Africans behind on debt, rising living costs and interest rates have fuelled aggressive and often illegal debt collection tactics.

However, consumers have certain legal protections against harassment, prescribed debt collection, and unfair practices.

According to consumer credit reporting company Experian, nearly 10 million South Africans are more than three months behind on their debt payments.

Because of this, many face aggressive calls, threats, and pressure to pay up, even when the debt shouldn’t be collected anymore.

Director and Head of Legal at Milaw Legal, Rynhardt de Lange, said creditor harassment remains a major issue in the debt industry. One of the most common tricks he sees is how Section 129 notices are misused.

“Section 129 notices are meant to open a conversation between the consumer and creditor before any legal action,” De Lange explained.

“But these days, they’re often sent like a final warning – meant to scare people instead of helping them figure out a way forward.”

He said consumers often receive late-night calls, blackmail threats, and pressure to pay debts that are too old to collect.

South African laws protect consumers by limiting when collectors can call, requiring collectors to be registered, and banning the collection of old (prescribed) debts. Unfortunately, these rules are regularly ignored.

This comes at a time when financial pressure on South Africans has been steadily increasing over the past few years, adding to rising consumer debt.

Since 2021, the prime interest rate climbed from 7% to 10.75%, while the cost of essentials like fuel, food, and housing surged sharply.

Over the past five years, overall inflation rose by 26.7%, with food prices soaring by around 40%. The cost of electricity and household fuels saw the largest jump, increasing by 68.1%.

Education expenses also rose significantly, with primary and secondary school fees increasing by 31.3% during the period.

Disputes with creditors rise

The financial strain South Africans are facing also became apparent after the implementation of the two-pot retirement system on 1 September 2024.

Billions have been withdrawn under the system, with R22 billion being paid out to 1.1 million South Africans in the first six weeks alone.

By January 2025, over 2.6 million withdrawals had been processed, pushing total disbursements past R43 billion.

The South African Reserve Bank has projected that total withdrawals in the initial months could range from R40 billion to R100 billion.

FNB’s Retirement Insights Survey data showed that the most common reason for withdrawal was to cover day-to-day expenses, as salaries failed to keep up with inflation since the pandemic.

The second-most common reason for withdrawal was to pay off debt, which can improve consumer financial health by freeing up additional monthly cash flow to boost savings.

Education fees and unforeseen expenses followed as the next most common reasons cited for making a retirement withdrawal.

With this kind of financial pressure, de Lange said it’s no surprise that disputes with creditors are rising. However, he stressed that consumers have the right to stand up for themselves.

“In the end, most South Africans aren’t trying to dodge their debts – they just want a fair chance to get back on track without being bullied.”

De Lange explained that there are five key protections every South African should know when dealing with debt or credit providers.

Firstly, creditors must follow the law before suing you. They must send a Section 129 notice and give you 20 days to respond before taking any legal action.

Secondly, harassment is illegal. Debt collectors are not allowed to call after hours or on Sundays, nor can they use threats or intimidation. If this happens, consumers should report it to the National Credit Regulator (NCR) or the Debt Collectors Council.

Thirdly, you have the right to negotiate. You can request a payment plan or apply for debt mediation, and creditors are legally required to seriously consider any reasonable offer you make.

Fourth, prescribed debt is not collectable. If there has been no payment or contact regarding a debt for three years or more, you are legally entitled to refuse to pay it.

Lastly, debt collectors must be registered and prove the debt is valid. Consumers should always ask for the collector’s ID and documentation confirming the debt. If they cannot provide proof, you are not obligated to pay.

“The National Credit Act was designed to protect consumers – to make sure lending is fair, affordable, and transparent,” De Lange said.

“It also set up the National Credit Regulator and Consumer Tribunal to keep everyone in check. But too many creditors still ignore these rules; consumers need to know they have rights, and the law is on their side.”