1: Introduction
The Lukhanji Municipality is committed to taking all reasonable steps to recover money owed to the Council. However, there are situations where the customer has legitimate problems paying accrued tariffs and fees. In such cases the customer needs to have a method by which arrangements may be made to pay off the debt.
This policy sets forth the policy framework that is to be used when entering into arrangement agreements with customers.
2: Principles to be applied:
Council will only entertain up to a maximum of three arrangements per customer.
All arrangements will be subject to a monthly review. Debtors who defaulted on three occasions in respect of arrangements made will be denied the privileged of making further arrangements and the full amount becomes payable.
In the event of a material change to the personal circumstances of the applicant the customer may apply to the CFO for a review of the arrangement.
Council will entertain no arrangements on accounts that have been handed over for legal action.
Arrangements will be concluded with customers based on the classification of their account. For purposes of this policy the following classifications will apply:o Domestic indigent or destitute indigent customer o Domestic customer
o Business customer
3: Arrangement Requirements for all Customers
The following requirements are relevant to all customers entering an arrangement regardless of their account classification:
Customers with arrangements must have their credit electricity metersconverted to prepayment electricity meters (exception given to large electrical users).
The customer must:o
Sign an acknowledgement of debto
Acknowledge that interest will be charged at the prescribed rate.o
Acknowledge that if the arrangements being negotiated later are defaulted on, restrictions of water supply and disconnection of electricity or blocked from buying electricity on the Prepayment System will follow immediately, as will proceedings.o
Acknowledge liability of all legal costs incurred.
Where the customer who wants to enter into an arrangement agreement is not the owner of the property, written permission must be obtained from the owner before theMunicipality may enter into such an agreement or sworn affidavit from the police indicating the information pertaining the period the tenant occupied the house.
Should the tenant obtain permission from the owner but then defaults on the arrangements, the owner must be notified in writing of the default.
Where the customer has been put under administration, written permission must be obtained from the Administrator and the owner of the property before any arrangements can be made.
All arrangements will be made in writing according to section 57 of the Magistrates Act 1944 on the prescribed form.
When making arrangements the following documents are required: copy of an ID and proof of income. ( No arrangements will be made without these documents )4: Domestic Indigent (or Destitute Indigent) Customers (with municipal electricity service) Arrangements
If a customer is classified as an indigent or destitute indigent and is a customer of the municipal electricity service (indigent as used here will refer to both classifications) as per the council’s Indigent Policy the following criteria will apply to arrangements made:
The indigent customer will be required to pay their current monthly account regularly each month. (This is the amount due after the indigent subsidy has been deducted.)
The indigent or destitute indigent’s arrear debt will be placed on the electricity prepaid system and 40% of each purchase will be allocated to the payment of arrears.
If regular payment of the current monthly account is maintained then only the 40% of payment received for electricity purchases will be allocated to arrears.
If regular payment of the current monthly account is not maintained then the monthly account will be collected first from the first electricity purchase each month before electricity can be purchased and thereafter 40% of payment received will be allocated to arrears.5: Domestic Customer Arrangements
If a customer is classified as a domestic (non-indigent) customer or as an indigent customer that does not receive municipal electrical service, then the following criteria will apply to arrangements made:
The domestic customer will be required to pay 10% of debt before arrangement can be made. The customers will be required to pay their current monthly accounts regular each month. In addition to this requirement the following arrangements may be made to eliminate the arrears debt:
If the customers are in the income group that has a total household income of less than R5,000 per month that customer may make arrangements to pay their arrears over a period of 36 months, interest free provided payments are made monthly by the due date.
If the customers are in the income group that has a household income of more than R5,000 per month that customer may make arrangements to pay their arrears over a period of 24 months, interest free provided payments are made monthly by the due date.
If the customer has annual charges the annual charges will be converted to monthly charges.6: Business Customer Arrangements
If a customer is classified as a business customer then the following criteria will apply to arrangements made:
The customer must pay full balance or 40% of the capital arrears .
The balance of the capital arrears (60%) must be paid off over no more than a 6 month period.
Failure to maintain the arrangement will result in full debt collection processes being implemented.7. Collection Processes
Disconnection / blocking of electricity supply
Issuing of letter of demands
Final notices and Summons
Handover of accounts to the attorneys
7: Breach of Arrangements
In the event of breach of arrangements, all arrear arrangements installments plus the current monthly account must be paid before the arrangement can be reinstated. If the required payments are not made, debt collection action will be instituted immediately as per the Credit Control and Debt Collection Policy.