What is Collection Commission and how is it calculated?

Some legal documents such as hire purchase agreements, loan agreements and other trade debts usually have clauses protecting creditors against defaulting debtors. As part of their terms, a provision is included that binds the debtor to pay any legal costs or collection commission that the creditor may incur when attempting to sue for the debt.

The collection commission fee is agreed on beforehand with the client. When an account is handed over for collections, the client must provide information as to what he/she requires from the legal team.

 

Soft Collections:

  1. Include phone calls, messages and email correspondence to set up an arrangement.
  2. This could be billed as a retainer or per-item-billing. (*see descriptions below.)

 

Hard Collections:

  1. Include letter of demand, acknowledgement of debt, summons.
  2. These items are billed as per company rates and are based on amount of time spent on the items, as well as the amount of information that is required.

*General costs of above-mentioned items:

Letter of demand (LOD): from R250-R600.

Acknowledgement of debt (AOD): from R300- R800

Summons: from R2000-R3500.

 

 

Retainer:

The company and client agree on a monthly set fee per file. This includes all correspondence and

work done on the file, as well as collection commission.

 

THE RISK: some companies may not go the extra mile for you, especially if the work exceeds the retainer amount.

 

 

Per-item-billing:

The client is billed per item, e.g. phone calls with the debtor are calculated per minute. An amount for collection commission will be added to every item.

 

THE RISK: This could become very expensive if every single item is added at the end of the month.

 

 

Important to Know:

Collection commission is also added when the debtor pays directly into the company’s trust account. A percentage thereof is kept for costs. It must be 10%, but not exceeding R1,000. This was decided on 24 July 2010 by the council in Ruling 6(2).

 

 

Contact Us

13 + 5 =

Vermeulen Attorneys
5.0
powered by Facebook
Cindy-lee Payne
Cindy-lee Payne
2018-10-15T10:50:14+0000
would like to thank Kaylee and Cathleen for an awesome service. friendly and very professional. would definitely recommend their serviceread more
Chandre Greeff
Chandre Greeff
2018-01-22T17:54:57+0000
Geraldine Bruce
Geraldine Bruce
2018-01-21T14:46:21+0000
Mervyn recently assisted me in a case against one of the largest financial institutions. I had really run out of options and Mervyn's knowledge and expertise convinced me right away that he was the one I wanted on my side. Mervyn and his team worked tirelessly and professionally to conclude the matter and I am extremely grateful my 3 year nightmare is finally over. I would definitely recommend Vermeulen Attorneys.read more
Christopher Evans
Christopher Evans
2018-01-14T10:09:01+0000
I am very impressed with Mervyn's professionalism, and willingness to go the extra mile. Vermeulen Attorneys have really outdone themselves in assisting me in a very trying time.read more
Cathy Foster
Cathy Foster
2017-05-18T11:06:03+0000
I have been using Vermeulen attorneys for more than 3 years in my business. I have had nothing but excellent service and regular feedback on all my cases. I highly recommend them.read more
Liyana Van Heerden
Liyana Van Heerden
2017-04-05T12:58:04+0000
Excellent feedback and Results. Vermeulen Attorneys handle all our outstanding accounts and have always proven themselves worthy of settling payment in the shortest of time frames. Their rates is affordable from small to big operating companies. The give excellent feedback so you always know where your case is standing. Glad we started working with them as they are saving us a lot of trouble and money.read more
Rina Snyders
Rina Snyders
2016-09-14T07:57:34+0000
WOW! Vermeulen Attorneys is nothing short of AMAZING. They handled my case so professionally and made sure justice was served. I am so grateful to have a lawyer like Mervyn represent me. Thank you. Your work is exceptional.read more
Daniela Pucci
Daniela Pucci
2016-08-02T14:22:30+0000
Cannot thank Vermeulen Attorneys enough for the wonderful services delivered from start to end. Due to your attentive & professional advice received on the matter, this created a preferred environment for ones difficulties in any situation. Thank you! this ensured a we underwent kept every attribute to the situation.read more
Pieter Van Rooyen
Pieter Van Rooyen
2014-02-09T17:09:33+0000
Lorraine Sigasa
Lorraine Sigasa
2014-02-04T23:49:12+0000
Bianca van Heerden
Bianca van Heerden
2014-02-04T11:36:33+0000
Next Reviews
Share This