Avoid bad credit record

DEBT consolidation can mess up your credit profile and finance if not properly managed.

DEBT consolidation can mess up your credit profile and finance if not properly managed.

This can result in a consumer's salary being attached when the intention was to avoid a bad credit record.

Take the case of Louisa Moto, who took loans to augment her salary to make ends meet. Moto later approached the now defunct Saambou bank for help to consolidate her debts.

Her aim was to move to higher ground to get out of debt but little did she know she was going to sink deeper into debt.

"I was advised to appoint an administrator since he was capable of improving my financial position, but I have to pay one debt for the third time," she complained.

Saambou agreed to consolidate her debts of R20000 she had with Altfin and Boland Bank.

After Saambou paid all her debts, she stopped repaying the loan in 2002 without paying the interest due to Saambou.

Saambou served a garnishee order against her salary and demanded R23000 over and above the R19500 she had paid.

Her problem was exacerbated by her employer's failure to add the attorney's fees and interest when uploading the capital balance she owed Saambou.

Saambou was later taken over by African Bank, who have now agreed to write off the further amount of R20206 their attorneys were demanding from Moto.

When she approached Consumer Line Moto was served with a third garnishee order and she could not take it anymore.

Consumer Line spoke to Marilyn Budow, a consumer advocate at African Bank, who agreed to write off her debt.

Budow confirmed that Moto took a loan from Saambou Bank that settled existing loans she had with Altfin, Boland Bank and Saambou Bank, totalling R20000. She said in terms of the contract she signed, she was to repay this loan in 48 monthly instalments of R1022.

Budow said she breached the agreement and stopped when she had only made 20 instalments.

"Unfortunately no payment was received in December 2004, January, February and March 2005. As a result the attorneys proceeded to obtain judgment and effected payment via the emolument attachment order," said Budow.

Explaining why a garnishee of R20204 was uploaded on Moto's salary again this year, Budow said this was because her employer had omitted to add interest and attorneys fees on her capital debt.

"We have therefore negotiated with the attorneys to write off the balance of their fees, and have instructed African Bank to close the account. No monies are thus owing by Moto on this account."

l The ABIL consumer advocate exists to protect the rights of consumers who are clients of African Bank. If a consumer is unhappy with the outcome that they have received to a complaint from African Bank, they should contact their office on 011-256-9284, fax 011- 207-4724 or e-mail consumeradvocate@africanbank.co.za.