fbpx
 

The Consumer’s Guide to Debt Prescription

Hammond Pole Attorneys > Hammond Pole Blog  > The Consumer’s Guide to Debt Prescription

The Consumer’s Guide to Debt Prescription

Ever received a demand for an old debt you’d forgotten about completely? You’re not alone. In South Africa, the law provides relief through a concept called prescription of debt. At Hammond Pole Attorneys, we believe in empowering consumers with knowledge about their rights and responsibilities regarding prescribed debt.

 

What is the prescription of debt all about?

Prescription refers to a legal concept in South Africa where a creditor’s right to claim unpaid debt expires after a specific period. This means that after enough time has passed, you are no longer legally obliged to settle the debt.

 

How long does prescribed debt stay on your credit report?

While prescribed debt cannot be legally pursued, it might still linger on your credit report for a maximum of 1 year after the prescription date. This can negatively impact your credit score.

 

Your rights and responsibilities in terms of the law

 

The National Credit Act (NCA) and the Prescription Act work together to govern debt prescription.

  • Section 126B of the NCA specifically prohibits the collection of prescribed debt. This means that creditors cannot use any forceful methods to recover the debt once it’s prescribed.

The Prescription Act dictates the timeframes for debt to be extinguished:

  • 30 years: Applies to any debt secured by a mortgage bond and any debt arising from a judgment.
  • 3 years: Applies to most other debts, including credit cards, personal loans, and other unsecured debt.

Important to note:

  • Prescription doesn’t automatically erase the debt. It only removes the creditor’s legal right to sue you for repayment.
  • The debt can still remain on your credit report for one year following the prescription date, impacting your ability to obtain credit.

 

Simply waiting for the debt to prescribe will not remove it entirely. You are still liable for the debt, and the creditor can still resort to various measures to collect, such as:

  • Selling the debt to a debt collection agency.
  • Including the debt in credit bureau reports, potentially affecting your credit score.


When prescription starts and resets

The prescription period generally begins as soon as the debt becomes due. However, certain actions can interrupt the prescription clock and restart the timeframe:

  • Payment (even partial) is made towards the debt.
  • The debtor expressly or indirectly acknowledges the debt (for example, signing an acknowledgement form).
  • A summons is served on the debtor for payment of the debt.


Debunking common myths about prescription debt

  • Myth: Prescribed debt disappears completely.
  • Reality: The debt simply remains unpaid, but the creditor cannot take legal action to recover it.
  • Myth: The only thing that resets the prescription clock is paying off a portion of the debt.
  • Reality: Any acknowledgement (including partial payments) restarts the prescription period.


Steps to take if you’re being pursued for debt that has prescribed

  • Validate the claim: Request written proof of the debt and ensure it falls within the legal prescription period.
  • Obtain proof of prescription: You can request a prescription certificate from the credit bureau or the original creditor.
  • Respond to any communication: Clearly state that the debt is prescribed and provide supporting documentation.
  • Gather documentation: Keep copies of all correspondence regarding the debt.
  • Consult a debt counsellor or attorney: They can advise you on your options and legal rights.

 

Seeking legal advice: when and how to consult an attorney

If you’re unsure about the legitimacy of a debt claim or require assistance ascertaining the legalities of prescribed debt, consulting an attorney specialising in debt collection is recommended. Hammond Pole Attorneys can assist you in understanding your rights and ensuring you are not unfairly pressured into settling a prescribed debt.

A blog article by: Santie van Eeden

For more information contact Hammond Pole Attorneys:

Santie Van Eeden – SantieVE@hpd.co.za

No Comments

Sorry, the comment form is closed at this time.

google amca seni sikerrrrr