I AM sometimes baffled by people who excitedly advise their friends to go under debt administration.
Going under debt administration is the worst thing you could do to yourself.
Administration is a procedure under the insolvency law. It functions as a rescue mechanism for insolvent companies and individuals and allows them to carry on running their business.
The process - an alternative to liquidation - is often known as going into administration. This is a case where a consumer was taken for a ride by being encouraged to go "under administration".
Donald Matsi of Ladanna in Polokwane has learnt his lesson. He regrets ever volunteering to be placed under administration.
He had six debts that he could not service properly when he approached J&P Administrators in 2007.
His debts amounted to R43200 and he was getting letters of demand from all directions and his salary was threatened with attachment orders, he said. He could only afford to pay R800. When spread, his debts totaled R3000 a month. He said frustration led him to P&J Administrators.
Matsi met the owner of the company, Mogashoa MJ, who "pleasantly explained to me how the process worked. He said I should make an application through the courts before I could be under their administration," Matsi said.
The administrator told him he would have to pay R800 a month to the administrator, who would in turn pay off the creditors.
He thought this was a great solution and he would have more money in his pocket and no more letters of demand from his creditors. They both agreed that he would only have an attachment for R800 against his salary.
"Mogashoa later increased the amount to R1800 before presenting my application to a magistrate without my consent," Matsi said.
"He arrogantly told me 'we are working here' and that he must take R1800 from my salary. He did it for two years, except that he only worked for his pocket," he said.
Matsi said Mogashoa took R43200 through an attachment order but never paid any of his creditors. The money was deducted over a period of 24 months and no statements were issued to show how funds were distributed, he said.
"I was always told the person who kept the keys to the filing cabinet was off or he was in court securing administration orders for other defaulters like me," Matsi said.
At one stage he was told that the owner had died as an excuse not to give him his statement, he said.
"I still wanted them to show me my file, which they eventually drew after I told them I was not leaving their offices. They could not explain where the rest of my money went," Matsi said.
"I was angry and demanded that they stop deducting money from my salary because they were not following my instructions."
It was after complaining to Speak Out, an SABC consumer programme, that "the dead Mogashoa" resurfaced, Matsi said.
" I was surprised to receive a call from Mogashoa. He called me to his office and pleaded with me not to expose his company. He said my money was safe in a trust account.
"He said he could only refund me in monthly instalments of R5000," he said.
Matsi said he accepted this, signed an acknowledgement of debt and made arrangements on how and when Mogashoa would pay his money back.
"Getting my money from Mogashoa has been a mission. I have to remind him every month to deposit my money," Matsi said.
To date Matsi has only received R15000 from Mogashoa, who is way behind with his debt repayments.
Consumer Line's efforts to get comment from administrator Mogashoa MJ have failed.
l If you are not sure what to do regarding your debts, contact the National Credit Regulator on 0860 627627.