At DebtBusters, we want to make sure that you stay well informed and that you know your rights when it comes to the topic ‘debt’. Many consumers with ‘old’ debt end up paying off the debt, even though they are no longer liable for it, due to the fact that they are unaware of what the law says.
What is ‘old’ debt?
‘Old’ debt, also known as prescribed debt, is debt that you legally owe but ceases to exist due to non-activity after a period of three consecutive years, since the debt was due or your last instalment. Therefore, if you were not aware of your debt and you have never been contacted by your credit provider to repay that debt within three consecutive years, your debt has prescribed. Legally, you do not have to repay the prescribed debt.
How does prescribed debt work?
The 1969 Prescription Act states:
- For at least three years, since the date the debt was due, there must have been no acknowledgment of the debt.
This means that you were not aware of the debt you owed and you never intentionally prevented the credit provider from knowing about the debt.
- You were not contacted by the creditor for the debt, whether by summons, letter of demand or by phone, within the three years since the debt was due.
This means that if your credit provider did not try to contact you to repay your debt within three years since the debt was due, you do not have to repay the debt. As of May 2014, if your debt has prescribed, credit providers may not attempt to recover your debt, if you have raised the defence of prescription or if you would have raised the defence had you been aware of prescription.
Important tips to know about prescribed debt:
- If you make a payment towards your debt or if you acknowledge the debt within the three years since the debt was due, your debt is no longer prescribed and you will be liable to pay.
- If you make a payment after your debt has prescribed, it will not reactivate the debt.
- Credit providers can still approach you for payment even after your debt has technically prescribed. It is your responsibility to know your rights and raise the defence of prescription. Once you have raised the defence, credit providers may not contact you for payment of the debt.
- All accounts can become prescribed except for your home loan, TV licence, municipal accounts and debt owing to SARS.
If you suspect that your debt has prescribed or if you are having difficulty paying off your existing debt, DebtBusters, the award winning Debt Management Company, can help you. DebtBusters is South Africa’s most TRUSTED Debt Management Company and we are dedicated to assisting South African consumers with their debt problems.
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We will provide you with a way of reducing your debt in 5 simple steps:
- WE can give you a FREE and CONFIDENTIAL credit assessment
- WE can CONSOLIDATE your debt repayments into one affordable monthly instalment
- WE can NEGOTIATE with your credit providers to reduce interest rates and fees on your accounts
- WE can get you LEGAL PROTECTION
- WE can get you DEBT FREE and issue you with a Clearance Certificate - CLEAR YOUR NAME
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