Question

1.1 Your company takes legal action against a debtor that has failed to settle his account. Identify the process that would be followed during legal action once a FINAL DEMAND has been sent and not been responded to. (10)

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1.2 The National Credit Act’s purpose is to protect consumers. What 5 rights are awarded to consumers by the NCA? (5) ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________

1.3 In a liquidation matter explain what is meant with the risk of contribution (2)

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1.4 When doing business transactions between different countries payment is done using a letter of credit. List 3 different types of letters of credit?

Answer 1

1. company will start debt recovery process if debtor doesnt respond to the final demand notice, which includes the following:

• If the debtor does not cooperate with resolving the debt, the debt collection service updates the client with details on forwarding the claim to the affiliated attorneys.
• Forwarded claim is signed by the client and sent to the affiliated attorneys, and if attorneys recommend legal action, suit requirements are provided.
• If client authorizes the legal action and agrees upon suit requirements, the lawsuit is prepared and filed. If the client doesn’t want to pursue legal action, the claim is worked on for an additional 60 days by the debt collection service and then closed.
• Complaint is served. If debtor files a response, the discovery process begins and a trial date is set. If debtor does not respond, a default judgment is filed by the attorneys.
• If a judgment is awarded in the client’s favor, attorneys will file a Writ of Attachment, attempt to locate debtor’s assets, and initiate steps to satisfy the judgment (bank levies, garnishments, liens, etc.).

2. Credit Rights Consumers Should Know:

1. The right to know what's in your credit file.Credit reports help financial businesses make more informed lending decisions. Your credit details aren't a secret

2. The right to an accurate, timely credit report.Need for accurate consumer credit information for the banking system to work smoothly. And so, the law gives consumers the right to have inaccurate, incomplete, and outdated information removed from their credit reports.

3. The right to have third-party collection agencies report only validated debts.The Fair Debt Collection Practices Act primarily guides how third-party collection agencies should contact consumers but also prevents collectors from reporting unverified debts.

4. The right to know how much your credit costs.

5. The right to equal credit access.

3. A danger of contribution usually exists in the Liquidation and Distribution Account once it becomes known that there are not sufficient funds available to defray all administration expenses. In this regard the concurrent creditors would have to contribute pro rata based on their claim in order to settle these costs. It is advisable to check with our offices whether such a danger of contribution exists before proving a claim. In most cases the Insolvency Practitioner would be in a position to advise you whether a danger of contribution exists when the time comes to prove your claim.

In terms of the extant position of law, it is the duty of the liquidator to call for contribution; however, it remains unclear whether there is a corresponding liability upon the FIs to make the same. While one line of thought would be affirmative, courtesy- intent as set out in the Discussion Paper; a larger proportion of stakeholders contend otherwise.

4.Letters of credit are assurances or guarantees to sellers that they will be paid for a large transaction. They are particularly common in international or foreign exchanges. Think of them as a form of payment insurance from a financial institution or another accredited party to the transaction. The very first letters of credit, common in the 18th century, were known as travelers' credits. The most common contemporary letters of credit are commercial letters of credit, standby letters of credit, revocable letters of credit, irrevocable letters of credit, revolving letters of credit, and red clause letters of credit, although there are several others.