Dealing with your prescribed debt in South Africa
Dealing with your prescribed debt in 2021 is a smart step towards reducing your overall debt burden. Not all debt lasts forever. The National Credit Act prohibits the collection and sale of prescribed debt. That means if you have old debt, you may qualify for debt clearance.
What is prescribed debt?
Prescribed debt is old debt that was not acknowledged for a period of 3 years. The debt expires so the credit provider loses the right to claim payment on the debt ever again.
A debt will prescribe if:
* You have not acknowledged the debt for 3 consecutive years.
* You have not made a payment, or a payment promise to the outstanding debt.
* You have not received a summons from the creditor to pay within 3 consecutive years
Interruptions to prescription
Prescription will not apply if:
* You acknowledge the debt, or make payment on the debt
* The creditor takes legal action against you
Do prescribed debts still show on your credit record?
Yes they can and they can be removed.
What types of debt prescribe in 3 years?
- Retail accounts
- Credit card accounts
- Telkom accounts
- Payday & personal loans
- Gym memberships
- Cell phone accounts
- Repossessed vehicle finance
What are my rights?
If a debt collector is demanding payment for prescribed debt, do not acknowledge the debt. If they call you simply say ” That debt has prescribed, stop calling me”! Use the prescription act as your defense and refuse to make a payment arrangement, until they are able to prove that the debt has not prescribed. Request the company to send you evidence to prove that the debt is still valid. That is your right.
Conclusion
It’s the right thing to honor your agreement and pay off your debt. Unfortunately, things happen, preventing you from being able to repay your debt. If you default on payment, a credit provider has 3 years to demand payment from you. Once the 3 -year period has lapsed, the debt has prescribed. Credit providers and debt collectors will always try to collect prescribed debt. It’s unlawful for credit providers to sell their old debt to debt collectors. Remember your rights. You do not have to pay prescribed debt.
