Vetting is a process followed in which as much information as possible is gathered about the debtor being handed over, in order to ensure the maximum potential for a good result to prior to legal action being instituted.
The rationale is that, if you know your debtor is the owner of a block of flats for example, prior to issuing a summons, you know that, once you have judgment, you have an asset that you are able to execute on. In other words, you know you will get your money at some stage.
The biggest risk in pursuing legal action is to pursue a matter to conclusion only to be left with a penniless debtor and therefore an empty judgment. In order to prevent this, one should vet the debtor before issuing summons in order to make a determination whether the debtor is good for the money judgment you wish to obtain against him or not. Naturally no-one would wish to spend thousands of Rands pursuing a judgment which they will never see recovered.
What steps can be taken in vetting a debtor?
- CREDIT BUREAU REPORT
If your contract makes provision for you obtaining records from the credit bureaus, you are halfway there. The credit bureaus are able to provide you with a comprehensive record indicating each and every credit agreement that the debtor has and whether payments are honoured in terms of that agreement.
You will further be able to ascertain whether the debtor is employed, should you at some stage be required to take the matter to the Section 65 Court and obtain an attachment on a portion of his salary.
The report shall also indicate crucial information such as immovable assets owned by the debtor.
Another unmissable aspect of these reports are the listing of judgments and defaulted payments. The report shall give you an indication of all judgments granted against your debtor, the amount it was for and the creditor that obtained judgment. Defaults are missed payments and are also listed and gives a good indication of your debtor’s general attitude towards debt.
- GOOGLE SEARCHES
It seems trivial, but it is always a crucial part of the vetting process to google a debtor.
The first important thing to have a look for is any complaints listed and what the nature of these complaints are. This will give you an indication as to what kind of debtor you are dealing with.
It is also a good idea to look for a website and see if it is updated. If so, you know your debtor is still actively trading. Take the telephone number off the website and give them a call. Are they trading?
Your search may give you some indication whether your debtor has any assets. If the debtor is a company that buys and sells cars, you will likely have assets upon which to execute your judgment. The google search is not conclusive on assets, however it may give some guidance.
- ASSET SEARCHES
These searches are usually done only in instances where the outstanding amount is substantial, due to the costs involved. A professional tracer will handle the tracing of assets and advise the attorney if there are any real assets which are eligible for execution by giving a report. If so, you can rest assured that your judgment will likely be satisfied should you execute.
Therefore, before you jump headlong into litigation recovering bad debt, ask your attorney which additional steps they offer to ensure that you are not left with an empty judgment? Please feel free to contact our offices to assist you with your bad debtors or for advice on how to prevent such situations.