 And typically how long would this process take, you know, and we are talking a movement because from from my view We're talking a process all the way from creating the dead You know the soft collection part of it and ultimately the litigation and hard litigation as you mean How long typically would it get would it take rather for for a normal date to get to the litigation stage? Tonight, we are shining light on debt collections and ways in which this process can be made easier. This is the private property podcast. I'm to me. Welcome Congratulations to Kuto Ramulale for walking away with that 500 grand cash prize from yesterday's show Thank you so much Kuto for engaging with us and hope you enjoy your prize So if you want to be like Kuto Don't miss your shot at walking away with that 500 grand cash prize and comment as many times as you like on our Facebook feed tonight So that we can get you in line to reading that 500 grand cash So to set the tone for tonight's show Here's a story about Maki a single mother of two from mid-grand who managed to change the trajectory at the time She was living from paycheck to paycheck and had absolutely no savings Her credit score had suffered because of the eviction and outstanding collections credit and medical debts. I Knew that I had I could not give up because I had to give my children the home. They deserved. She says To turn her situation around make his first step was to improve her financial literacy. I Made a decision to learn as much as I could about Personal finance credit debt elimination as well as saving I read personal development books as well as financial books so that I can write out my financial goals Maki started to save a portion of her salary each month and created a simple budget And made steps to rebuild her credit and eliminated her debt She has since left her government position to start her own company I would tell other women in a similar situation never to lose hope Maki said They can change their financial trajectories and build financial lives for themselves and their children If Maki did it You can also do it this story inspires a lot of people out there to say you can stay on top of your financial game All you need to know is good Good financial sound advice And that's the reason why we have the podcast and you know that tonight We are going to give you a lot of insights because we've got two guests in studio Our first guest is Simone Sundali She has experience in All facets of law, but she specializes particularly in and particularly enjoys civil litigation Simone completed her articles of clerkship and was immediately admitted as a legal practitioner And attorney at the High Court of KwaZulu Natal Private property family let us welcome soon Simone Simone Simone. Good evening and thank you so much for joining us Good evening. Thank you for having me on your podcast It is an absolute pleasure and joining you tonight on the hot seat as a gentleman who needs no introduction to our show With five years of post admission experience He was fortunate to be an integral part of South Africa's largest and most skilled Levy finance team at property and property management giants known as Trafalgar group And he is currently he currently holds a position as an attorney and property manager at Zidfan Vincent good evening. And thank you so much for joining us Hi to me. Thanks. Good to be back Thank you so much guys for joining us. So, you know as when we have two guests We definitely Know that we bring that that knowledge and that insight together for us to you know to give to our viewers tonight So I will jump straight into our subject tonight and talk soft debt collection What is it and and Simone you can you can handle this one to say what is it and how does it look and why is it called soft? Okay, well, essentially soft debt collection is the process that debt collectors or an attorney would undergo before they proceed all the way to court So it's those phone calls those sms's those whatsapps Or emails that you would get encouraging a debtor to Pay or settle entirely or make some kind of arrangement and try to get their debt resolved I think it would be called soft because it's a in comparison to what litigation actually is It's a much easier way of of engaging with the data and having the data Encouraging the data rather to settle Sure, and when you say it's it's kind of it's the first steps and Is there any other thing right that we look at as soft collection in that you didn't mention maybe just to give the viewers an overview of it So soft collection Well, there's there's various forms of soft collection We look at your basic forms for example your telephone calls your sms's your whatsapps A lot of the times we Especially at cds the fund that we deal with They would engage with the data on facebook or on linkedin or on social media Anything that one can do to get the data To acknowledge that yes, I've got a debt that I need to now resolve and instead of allowing these debt collectors to take me to court Or having to run up and down to court because an attorney has now issued summons I would rather engage with them to make some kind of payment arrangement or settle in its entirety Yeah Vincent to bring you in here. What happens now when one has gone into the process of litigation because Simone has explained a little bit in terms of soft collections. Let's talk now litigation Once it has gotten into the process. How does it look and how why is it fundamentally different from soft collections? To me, I think in in in that context the reality is and especially from my context as well coming from a company where we provide specialist project loans and finance to body corporates and homeowner's associations You know, the reality is that most of these schemes are managed by managing agents as opposed 95 Maybe 90 percent of them some are self managed But you know, it's also a function of these managing agents to to kind of collect levies and Large part of the time the members in these buildings and the trustees rely on these managing agents to collect levies But in saying that a managing agent has managing agent functions and they're not debt collectors Although they do offer the services, you know, they're not they're not your you're managing agent debt collectors They've got all other sort of administrative functions. So I think, you know from that point of view You know litigation kind of comes Once you're managing agents or your debt collectors as Simone explained It's kind of failed in in doing that soft collection part and it does fail There is definitely no silver bullet to it. And I think that doesn't take away What you would call an inverted commas hard hard collection, which is more your litigation going to court kind of a thing But I think the biggest difference in reality is that that litigation costs a lot of money Litigation is Generically expensive, you know, whereas soft collection is is kind of a means you take to to prevent upfront costs because remember for a lot of these buildings and You know where there's a lot of debtors There's cash flow constraints because you're not collecting money So collecting money costs money And that would be the big difference in that litigation costs money and time Unfortunately, we don't live in a In a world and I'd say country particularly where legal system is, you know, completely on the ball So mode and I know that firsthand. So you're dealing with delays. You're dealing with You know deficiencies in the system. So I think Time money would probably be the biggest differences between soft collection and and growing full steam litigation And typically how long would this process take, you know We're talking a movement because from from my view We're talking a process all the way from creating the debt, you know The soft collection part of it and ultimately the litigation and hard litigation as you mean How long typically would would it get would it take rather for for a normal date to get to the litigation stage? um, that's for you I think that's Simone come in at any time But I think that's kind of dependent on on the specific people in in question to me because you will have buildings We'll give debtors quite a bit of Rope and time to settle debts and arrangements and so forth And then you'll have other buildings that don't tolerate anything more than one month in arrears You know, so in in my experience if you if from a levy context, which I suppose is relevant to Simone's a specialist levy collection attorney and I did a lot of levy collections prior and do it at the moment more in-house legal but You know from a from a levy point of view generally looking at anything From one month in a rear to maybe two months should be going to soft collection and body corporate should be actively looking at that Because you know the moment someone hasn't paid for two months. It's kind of a red flag And in my experience, that's kind of the window and then I suppose the reality is For litigation, it's very little makes very little sense for you to litigate on small amounts as crazy as that sounds You know, because once you start issuing summons and all sorts of things You'll find very quickly that your legal fees quickly exceed the amount. That's actually true Um, so I think that's why soft collection has a very good place in the market. I don't think people use it enough Um, and I don't think people know enough about it. So Yeah, for from my side, they would kind of be the time limits, but it all depends it depends on the client It depends what they need it depends on the building's preferences. It's There's no one hard fast rule in terms of the time period Definitely. Thank you so much Just Sorry to just to add very quickly Um, in respect of the time frame for debt collection You're looking at around about 14 days because usually what would happen, especially with levy collections Is you would have to send out your section 25 for notice Which then affords the debt of 14 days within which to respond to that notice It's tantamount to a letter of demand. So as debt collectors, they would then engage in all those manners of debt collecting for those 14 days Not to say that if you don't correspond to the debt collector, you're suddenly You cannot correspond afterwards. Of course you can but now you run the risk of the matter going into litigation Having your file formally handed over to an attorney who's really not going to take your telephone calls too often They would rather just make the money and push out the summons So in terms of costing you're also looking at where at soft collection You have a normal debt collection tariff which comes straight from the debt collectors act You're looking at a total of about 405 grand whereas with litigation Just purely to push out the initial court processes. You're looking at um, maybe a cost of between a thousand to 2500 grand Once again depending on which attorneys you take So once again as vincent said that that's one of the biggest concerns that we have Um in that, you know, the costing is also a big problem And what advice um Simone would you give to somebody who is probably uh, um, a tenant or even a home owner You know, who just who's fallen behind on their payments for what for for one reason or the other You know with covet and covet hitting and all of these changes that are happening in in the In the industry now people are really feeling that pinch. What would you what advice would you give somebody to Who has fallen behind on their payment? What are the steps that they can take for them to avoid these? Processes because I can imagine that these processes are quite Heavy and tedious and even really impacting on one's um credit school So I I think my um, my best piece of advice would to be communicate Don't leave it for months and months on end until you are dragged down to court or you're suddenly blacklisted, etc Rather communicate first hand if you are a tenant who cannot afford To pay the rentals as per your lease agreement because covet has hit. Maybe you've lost your job Or maybe you're a unit owner who then can't afford to pay on the levies Don't leave it to go into three or four months where the The the body corporate or the landlord thinks that you don't really care about the areas that you are now accumulating So the first thing to do is to communicate send an email We would obviously in the profession always say record everything in writing So send an email send a whatsapp make sure you save the messages Try to engage with the landlord or the body corporate or the managing agent Whoever it may be and tell them your story Because more often than not especially in this climate when where there's covet the main aim is to ensure that money comes in A lot of the times as vencent explained we have body corporates where there might be some kind of deficit in their budget So their main aim is not to spend too much money on litigation. They would rather you say to them Okay, I will pay X amount towards my arrears. This is all I can afford because I've lost my job Or I'm now living on one salary in the household something like that. So point one communicate Point two do it quickly And obviously point three be open and honest I know that we're in the profession and you know, we come across as shocks A lot of the time but if you are open and honest with your story Then we are all humans at the end of the day and we can empathize we understand when people have lost their jobs It could happen to anybody So I think for those three those three points are the most important ones Thank you so much for that And I'm sure somebody who's watching is really really benefiting someone who might just be in that situation And if you want to engage with us With regards to this topic if you have comments you've got questions Please put them on the feed so that we can field them before we wrap the conversation up Vincent you spoke a little bit about Levies and body corporate levies and home association levies and I want us to just tackle that a bit to say How will a home owner or how will the owner be affected? You know with with if they fail to pay these levies and these these homeowners association Levies and all these rates that they need to pay Um to me I think it ties into what Simone said and I promise you it's not rehearsed because I hadn't seen her before we logged on the call But the reality is that communication is very key And I think it's I've seen it often, you know It's just go quiet and it might be that some don't care But I think in in just in general terms, they just don't actually know what to do It's kind of like a monkey on your back. We don't know what to do about it Um, you know in in levy context is a topic that we can discuss for for hours and hours, but just you know briefly Levies are a function of a body corporate expense in nature is To a lesser degree, but similarly, you know in the moment people aren't paying it creates massive cash flow problems It leads to debts not being paid and it just leads to a mess in body corporates and it can become a mess quite quickly You know, so in in terms of owners being affected owners can be affected massively You know, I'll say that because you're looking at black listings on your names with credit bureaus You're looking at legal action which effectively could lead to your property being attached You know properties get attached daily You can you can go into any sheriff's website or newspapers and check your fund sale and executions on properties daily Generally through the banks and and and debt collection attorneys for for some sort of credit to debt So it's it's a massive thing in terms of credit records You know, those kind of things are listed on credit bureaus and they stay there So, you know apart from creating cash flow problems in the scheme and and probably being You know causing other members in your complex to be very frustrated with you You know, you're looking at those other implications which are massive massive for your future credit massive for Your ability to purchase things in future and I don't think people realize that so yeah, I would say that's probably the biggest consideration that defaulting members in body corporates need to think about Cool. Thank you so much for that and um, there's a quick question that came in from social media and Glenn Matjosi is asking can can they evict you when you send an email stating that you can't pay the levies? Simone Look, I don't know the entire facts of the situation. Sorry. I can't really give a full opinion but in general any least agreement has a breach clause and usually Um, you know in particular if it's read with a consumer protection act, there would be A time frame that's afforded for the tenant to rectify their breach So naturally every landlord would then like I said, so in the beginning communicate with the tenant and advise that look You are now in arrears You know, I'm giving you x amount of time to to rectify that arrears And if you don't then I'm going to have to pursue legal action to evicts Now remember that they can't just pitch up with a bunch of guys and say look, you've got to leave That's not allowed. You have to get a formal court order Um, but I think in respect of the email Look, I'm I'm happy that you did in fact already take the first point and start communicating but it does It does not say that the landlord can then evict you because you're saying you can no longer afford your rentals It's um a part and parcel deal the landlord must take that into consideration But you as well as a tenant need to in all fairness take that into consideration and and look at whether you can in fact Maintain this property or whether it would be fair for you as a tenant who can no longer afford to pay The stipulated rental whether it would be fair for you to continue to reside there Is there alternative accommodation you can get maybe something cheaper? Etc so take the opportunity my advice Would be to take the opportunity to engage with the landlord and see what kind of arrangement the two of you can come Up with if there's any arrears you can make an arrangement for the arrears Maybe you can start looking for some other property or maybe you can say well Give me a rental rebate or reduction for the next three months because i'm looking for a job Etc so it really does come down to communication and keep that line of communication open Sure Go ahead please just briefly. I think the distinction also needs to be made between levies and and and rental You know if you're paying levies by implication your owner in the scheme and you can't be evicted from your own property You own that property. Yeah So there's other procedures relating to non-payment of levies and that would generally lead to the selling of the unit in execution To recoup a real levies whereas whereas rental I know is obviously a different story and Simone has explained that fully so so listeners Or viewers just need to bear that in mind if you're paying levies You you definitely can't be evicted you own that property and you should have a title deed for that property Sure. No, thank you so much for that. Um before I let you guys go one more question and and Vincent I'll fill this your ways and um Polina of course is asking how long is the grace period generally if you are unable to pay in the next coming months And i'm guessing this is rent To me, I think Simone explained large part of this but it would also largely You know relate to the the landlords Workings and how they work You know from like from a from a levy example to be honest, you know most managing agents You know kind of would give you to the seventh of the month to pay albeit levies are due on the first of the month as is rental Um, so it's kind of dependent on clients in terms of or not clients I say landlords and and managing agents and trustees by implication On how they want to operate those kind of grace periods So there is no fixed answer But I think a big myth in industry is that levies are due on the seventh and so is rental which is not actually factual These things are invoiced and due on the first of the month But the whole country kind of has the seventh in their mind because I think a lot of credit providers kind of Give you till the seventh to pay So it will depend on the you know on the on the credit provider say credit provider or Body corporate managing agent or whoever the case is Thank you so much for that vince and Thank you so much. Simone as well for coming through and just giving us these insights I'm sure someone who's sitting at home and who might be in this situation. It has learned so much You know communication is important. Actually, we had a comment where somebody was like the three points You guys gave us tonight were absolutely amazing and they will help You know help someone in terms of making that decision on how to handle debt Thank you so much guys for joining us and have a great night Thanks to me. Thank you Thanks vince and I am sure your ears are itching to know who won tonight's 500 grand cash prize And I am going to tell you up this course And let you guys know who that person is Give me a second The drumroll can come through And the winner of tonight's 500 grand cash prize is mohale mohale So I'm guessing that mohale mohale is going to have a beautiful pre weekend tonight. Well, enjoy your present Thank you so much for engaging with us on the socials If you want to be like him join us tomorrow right here on the private property podcast at 7 p.m And engage with us comment. Let us know if you like our new format We've changed things around just for you. My name is to me. Have a beautiful night and thank you for joining us