KDM cancels debt to save money
The recommendation to write off outstanding debts owed by indigent and sundry debtors and irrecoverable handed over debts, was passed by council on Wednesday, April 20.
KwaDukuza municipality has decided to write off just over R2 million worth of debt they said they had been unable to recover from customers.
The recommendation to write off outstanding debts owed by indigent and sundry debtors and irrecoverable handed over debts, was passed by council on Wednesday, April 20.
According to KwaDukuza council minutes, “Trying to recover these debts has proven to be a fruitless and wasteful expenditure to council and it was concluded that the cost of recovering the debt would be more than the principal debt.”
“The amount to be written off is based on analysis as on March 31, 2016 and interest that will accrue from April to June 2016 will also be written off.”
Recovering the said debt was reportedly extremely difficult because the majority of the indigent debtors were either low income earners or unemployed people who had said they were willing to settle their current accounts but were unable to meet the financial arrangements made to pay off their arrears accounts.
“Identified irrevocable sundry debts originated from housing rental, medical aid and fire call-outs. Those owing rental income were either no longer occupying the property, or were untraceable or deceased while fire and rescue debts were nearly impossible to collect because inadequate contact and personal information was captured at the time of the incidents. Where vehicles are involved, often the ownership of the vehicle is in the process of being transferred which means neither party is willing to acknowledge liability and pay the debt and those cases were also difficult to prove in court.”
Council felt it had exhausted all credit control and debt collection avenues available and it was better and more cost effective to write off the debt.
“Debt written off are R972 817.44 indigent debt, R767 753.97 in sundry debt and R267 656.18 in irrevocable handed over debt.”
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