How school fees can ruin your credit rating
THINK a missed school fee is no big deal? Think again. Experts say not paying your child's education fees can destroy your financial creditability and leave you with a black mark against your name for years to come.
It can stop you from getting a home or car loan, credit card or even a mobile phone.
Consumer and financial law firm, MyCRA Lawyers CEO, Graham Doessel, says in the last two years there has been a spike in the number of parents with judgments on their credit files put there by schools who had taken parents to court.
And he says even if parents do cough up the dough before it makes it to court - their personal credit report card will show a fail mark - one that warns off lenders.
"As it stands today, if a school sues you as a parent, as soon as it files the Statement of Claim in the magistrates' court, that will be picked up by all three credit reporting bodies and placed on your credit file search," he says.
"A lender that sees you can't pay school fees will be quick to assume you can't pay a mortgage, a credit card or afford to pay your phone bill.
"Even if, let's say, the bill gets sorted out - that stays on credit files for five years.
"And my concern is the damage that does to someone's life."
Three years ago, Nik Cree contested a $10,000 school fee bill for his three primary-school aged children.
Mr Cree says an admin error by the school meant fees had not come out of his account and the first he knew about the debt was towards the end of the final school term.
By then he was in dispute with the school over its curriculum.
On principle, he refused to pay the fees.
The school took him to court - and won - and he was left owing more than double that amount.
"We cannot get a house, get a car, anything now it's on our credit report," Mr Cree told Saved By Michelle.
"If we want to buy anything, we can't get credit; we have to pay cash."
The majority of delinquent debts arise in the course of matrimonial meltdowns, according to Mr Doessel.
Typically one or the other parent stops paying their half, or if one is the primary breadwinner, he or she stops paying at all.
Similiarly, a parent could lose their job or have to take time out to care for a sick family member.
Mr Doessel says while some schools have financial hardship provisions not all "play nice."
"If you get into financial trouble or get into any sort of hardship with a licensed creditor that is governed by the National Cosnumer Credit Protection Act then they have obligations to offer you hardship provisions even if there is even suspected hardship," he says.
"Because schools aren't listed as credit providers they don't come under same regulations as say a bank or credit card company."
Jack Stevens, CEO for Edstart - a company that offers a payment plan so parents can pay fees in more manageable weekly, fornightly or monthly payments, says there's a spike in new customers early in the year.
But many parents sign-up as the year progresses and the reality of fees kick in.
"When school fees don't get paid, the school loses; clearly; the kids lose - they probably have to change schools; and other families lose too because it is putting upward pressure on school fees for everyone else," Mr Stevens says.
Mr Doessel's advice is if you are having trouble paying, get up to the office and talk to someone at the school - first.
"We tell anyone dealing with a creditor (that) they can't pay: communicate and be up-front.
"Some schools will even offer a payment plan that allows you to lower your repayments, but continue to pay your child's school fees after they leave.
"But it's important to reiterate, that just because your child has left a school, you haven't been freed of the debt incurred while they were there."