On 01 April 2014, new regulations made by the Minister of Trade and Industry in terms of the National Credit Act, 2005 came into effect. The regulations deal with the removal of adverse consumer credit information and information relating to paid up judgments. If you are a healthcare service provider in private practice and you do not run a strictly cash practice, the new regulations are likely to impact on your debtors book.
An effective but not entirely uncontroversial tool used by debt collectors has been the use of adverse consumer credit information to collect bad debts. A creditor was able to classify a debtor who did not pay on time as "delinquent", "defaulting", "slow paying", "absconded" or "not contactable" and report the classification to a registered credit bureau. It was possible to report the classification without obtaining a judgment or commencing court proceedings. In layman's terms this was called "blacklisting" and it was used to good effect to compel debtors who value their credit records to pay their debts.
In terms of the new regulations all registered credit bureaus have until the end of June 2014 to remove (i) all adverse consumer credit information and (ii) all information about paid up judgments from a debtor's credit record. This does not mean that debts don't have to be paid. It means that a creditor will only be able to blacklist a debtor if a civil court judgment has been obtained and for as long as the capital amount under the judgment remains unpaid.
Should you be providing credit to your patients (ie time to pay their accounts) and you have or will be taking judgment against defaulters, you may not blacklist defaulters until you have obtained a civil court judgment and only for as long as the capital amount of the debt remains unpaid. You are obliged to inform all registered credit bureaus of a paid up judgment within 7 days of receipt of the final capital payment from the debtor. Unpaid civil court judgments obtained before 01 April 2014 and which were not reported to credit bureaus by 07 April 2014 will not reflect on the debtors credit record.
The relevant government gazette and contact details of credit bureaus can be viewed free online at www.gpwonline.co.za .
