Asked by Samantha on 07-03-2016 11:16:55
Question posted in the General Law category relating to KwaZulu-Natal
Question posted in the General Law category relating to KwaZulu-Natal
Is it legal to charge for recovery of legal fees and interest on overdue patient accounts owing to a Doctor?
Further information relating to Question:
If a debt collection agency takes 10% of what they recover, we want to add the 10% to the intial amount given to them to recover so that we get the full amount owing back, ie.
Patient owes : R 1500.00
Amount we instruct debt recovery agency to recover : R 1666.66
On recovery they will deduct their fee of 10% : R 166.66
Amount we receive is the original amount owing : R 1500.00
Is this legal?
Message from the Lawyer
Posted by Att. Patrick on 07-03-2016 13:18:10
Hi there Samantha and thank you for your question,
Unfortunately no, you can't do that.
If the amount which the patient owes is R1500 and you "sell" that debt to a collection agency and they take 10%, then that 10% must come off the bottom line leaving you with R1350. I'm assuming in this situation that the risk in the collection would MOVE to the collection agency. i.e. they are at risk if they don't recover on the debt.
The only other way is that you don't actually "sell" the debt to the collection agency, but they rather just collect the debt on your behalf. i.e. the risk stays with you. Then they would be entitled to charge you 10% of all monies collected from the patient, and you could then recover that 10% from the patient.
BUT, in order to do that one of the doctor's terms and conditions must include the words similar to this:
"... the patient agrees that in the event that the account is handed over to an attorney and/or collections agency, that the doctor will be entitled to recover from the patient all legal fees, interest, collection commission, sheriff's fees, tracing agents fees, and the like ..."
The 10% is also only applicable if the patient pays off the capital amount by way of instalments! If the patient pays in a lump sum payment, then the collector can't recover the 10%.
Read more here: http://www.iol.co.za/business/personal-finance/theres-a-limit-to-what-debt-collectors-can-charge-you-1557015
If there is a part of the answer which you need more advice on, or clarity please continue in this same thread instead of opening a new question.
Att. Patrick
Please remember this is a dialog if you have follow up questions please use the REPLY button and ask. If I did not answer the question you thought you were asking, please respond with the specific question you wanted answered. I hope you found my answer helpful, and you have finished asking your questions, please click on the GREEN ACCEPT button in order to mark the question as closed.
Unfortunately no, you can't do that.
If the amount which the patient owes is R1500 and you "sell" that debt to a collection agency and they take 10%, then that 10% must come off the bottom line leaving you with R1350. I'm assuming in this situation that the risk in the collection would MOVE to the collection agency. i.e. they are at risk if they don't recover on the debt.
The only other way is that you don't actually "sell" the debt to the collection agency, but they rather just collect the debt on your behalf. i.e. the risk stays with you. Then they would be entitled to charge you 10% of all monies collected from the patient, and you could then recover that 10% from the patient.
BUT, in order to do that one of the doctor's terms and conditions must include the words similar to this:
"... the patient agrees that in the event that the account is handed over to an attorney and/or collections agency, that the doctor will be entitled to recover from the patient all legal fees, interest, collection commission, sheriff's fees, tracing agents fees, and the like ..."
The 10% is also only applicable if the patient pays off the capital amount by way of instalments! If the patient pays in a lump sum payment, then the collector can't recover the 10%.
Read more here: http://www.iol.co.za/business/personal-finance/theres-a-limit-to-what-debt-collectors-can-charge-you-1557015
If there is a part of the answer which you need more advice on, or clarity please continue in this same thread instead of opening a new question.
Att. Patrick
Please remember this is a dialog if you have follow up questions please use the REPLY button and ask. If I did not answer the question you thought you were asking, please respond with the specific question you wanted answered. I hope you found my answer helpful, and you have finished asking your questions, please click on the GREEN ACCEPT button in order to mark the question as closed.
Message from the client
Thank you for your response.
Just to clarify : if the debt still belongs to the Doctor - ie. it's not "sold" to the collection agency, they are only collecting on our behalf - then we can recover legal fees provided the patient has signed terms and conditions accepting that they will be liable for legal fees in the event of non-payment of their account...
Just to clarify : if the debt still belongs to the Doctor - ie. it's not "sold" to the collection agency, they are only collecting on our behalf - then we can recover legal fees provided the patient has signed terms and conditions accepting that they will be liable for legal fees in the event of non-payment of their account...
Message from the Lawyer
Posted by Att. Patrick on 07-03-2016 17:35:34
Yes, exactly!
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