A promise to pay (PTP) is basically a verbal acknowledgment of debt where a debtor makes an arrangement verbally or in writing to repay monies outstanding.
A PTP can also be considered as a vague “I’ll sort that out month end” so be careful when acknowledging debt as a form of getting the collection agent off of the phone when you are not 100% sure of the account outstanding. By making a PTP you are taking the liability of the outstanding amount in your personal capacity.
Ten Pointers when making a PTP:
- Make sure you know where the account is from and what it is for.
- Make sure that you as an individual are responsible for the account. If not, give the collection agent the right parties’ details.
- Where the balance came from and if it is fair.
- Always ask for a statement or invoices as proof of the outstanding balance.
- Make sure the dates and amounts are correct on the statement in question.
- Make sure you have all of the relevant information before agreeing to pay the account.
- Make sure no unnecessary costs were added and if so query the balance
- If you are in a position to settle the account, ask for a discount! Most companies do have discounts available but merely on request by the debtor.
- Before the account is paid, make sure of the banking details and if the beneficiary corresponds with the company name.
- When payment is made insist on a “paid in full” letter. All companies have the capacity to provide you a letter. And it is your right to be given one
|Google’s version of a PTP:
A promise to pay agreement, also known as a promissory note, is a legally binding contract through which one party promises in writing or orally to pay a definite sum of money to another party at a specified date. The agreement delineates the terms that determine the specifics of the lending process. – Google
As a creditor, you step into a mutual agreement with the debtor to render a service and or borrow money in exchange for payment. You, therefore have the right to recover the debts owed to you with help from a debt collection company or legal firm acting on your behalf. You also can charge the debtor your collection commission/legal costs.
NB: Always remember a verbal agreement is just as valid as a written agreement.
How the collection process works when an account is handed over:
Step 1- Soft Collections. This is anything from a courtesy call to a reminder email to try and handle the collection process in an amicable manner.
Step 2- Letter of demand– a letter demanding the debt will be sent and in failing to pay, will lead to legal action in form of summons.
Step 3- If a debtor does not comply with the letter of demand sent, you are now in a position to issue a summons.
Step 4- Once the summons is served upon the debtor via sheriff of the court, you can then apply for default judgement.
Step 5- When judgement has been granted you can issue a warrant of execution against the debtor’s goods/assets as well as list the debtor with the national credit bureau as a delinquent payer.
Once a listing has been done the debtor will not be given credit until the listing has been uplifted and this will only be done once the account is settled in full and a paid-up-letter is submitted to the Credit Bureau. When the letter is received, it could take up to 20 working days for the listing to be updated