The prescription of debt: When you cant be forced to pay

12 Mar 2017

“The Prescription Act provides that the basic period of prescription shall be 30 years in respect of any ‘judgement of debt’ and 3 years for ‘any other debt’.”

The phone rings and the agent on the other end inform you that you have not paid your debt. You have no idea what debt he is talking about and the person on the other end says “Just pay R20.00. That is all we ask for”. This is an old trick used by Debt Collectors to collect prescribed debt.
The Prescription Act provides that the basic period of prescription shall be 30 years in respect of any ‘judgement of debt’ and 3 years for ‘any other debt’.
The effect is that in the case of ‘any other debt’ where no payment has been made for a period of 3 years, the debt has “prescribed”. This means that the debt has been completely distinguished and does not have to be paid.
The prescription of debt should not be confused with “debt written off” by Credit Providers. In many cases Credit Bureau reports will show ‘Debt written off”. The legal right to collect debt is retained by Credit providers even if they have written the debt off.
In many cases Creditors’ can sell their Debtor’s Book to Debt Collectors – who will then collect the debt. These Debt Collectors’ aim is to collect more than what they have paid for the Debtors’ Book. When they phone consumers, they often entice them to make a small payment. The reason for this is that any payment creates an interruption of the prescription period. When this is done the prescription period will start to run again and the consumer is obliged to pay the debt in full.
Any written acknowledgment of debt will have the same effect. Any express or tacit acknowledgement of liability by the debtor will create an interruption of the prescription period.
The Prescription Act makes provision for the delay of the prescription period in the following circumstances:
  • if the debtor is a minor
  • if the debtor lives outside South Africa
  • if the creditor and debtor are married to each other
  • if both parties are partners in a business
  • if the debt is part of arbitration or
  • if the debt is part of a claim against an estate.
When you receive a phone call and you are sure it relates to a debt older than 3 years, and where you have made no payment during the last 3 years and you have signed no acknowledgement of debt during the last 3 years, you should not confirm or acknowledge anything, sign nothing and pay nothing. Your only reply should be “Prescription applies …..Good bye”. If you are not sure – ask an expert before you do anything.
In most instances, Debt Collectors collect for their own account, and very often they counter Claims of Prescription. Some agents will simply say: Your information is not correct you have to pay”. Others will come with a more sophisticated response such as this one: “Kindly be advised that a claim of prescription will not exonerate you from the debt”. The simple truth is that if a debt has “prescribed”, it is not merely dormant – it has been completely extinguished – except if prescription is interrupted by a payment or acknowledgement of debt.
If the debt relates to a judgment of a South African Court, the prescription period is 30 years. If you have signed a surety and co-principal debtor and a judgment has been obtained on that debt, you may be held liable for the debt up to 30 years as well.
It must be noted that the normal Prescription rules does not apply to debts owed to the State; such as: Tax, Municipal Debt, TV Licences and Loans from the State.
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