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How long before debt is written off in South Africa?

Struggling to pay off debt? Dreaming of having it written off? This is a common thought for consumers making repayments. But is it a possibility?

According to experts, the answer lies in whether this is considered prescribed debt or not. There are also different time specifications for different loan types.

Prescribed debt could be written off

Prescribed debt refers to the debt that has not been recognised by the creditor or been paid towards for more than 36 months. This is considered old debt by creditors and may then be written off.

In the past, creditors would often ignore the debt, allow it to gain interest, and then pursue collection after the debt had accrued to substantially more than the original amount.

Consumers who were often not as financially clued up on their rights when it comes to this process, had to fork out exorbitant amounts. This is because it was fully up to them to argue prescription as a defence.

However, since the 2015 - due to amendments made to the National Credit Act (NCA) - it has been harder for creditors and collectors to regain this debt. Though, collectors will still try their luck and insist that the consumer is liable to pay.

The most common tactic is to get the consumer to acknowledge the debt through incessant communication. This means that should you engage with them and therefore recognise the debt, you may be liable for it and they have grounds to pursue collection.

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Prescribed debt for certain loan types

Another consideration is the time specifications afforded to certain loan types.

According to experts in South Africa, there is a distinction made between Group A (personal loans, vehicle loans, credit cards, and store accounts) and Group B (home loans, court-ordered debt, and debt owed to the South African Revenue Services).

This distinction details that Group A may be considered prescribed if the debt has not been recognised for three or more years. Group B needs to have not been recognised or paid towards for thirty years.

It is important to note that non-recognition of debt means having made no payments or never receiving any collection communication or never been issued with any notice of legal action from the creditor.

We want to reiterate that this does not mean that you should ignore your debt. Often doing this could lead to repossession of assets, or further legal action that could see you having to fork out far more than the original debt amount.

Instead, if you are struggling with keeping up with debt repayments, we encourage you to contact us for a free debt assessment and the necessary debt assistance. Not only will we protect you from legal action and repossession, but we will be able to identify whether your debt can be considered prescribed. If so, we will make it our duty to ensure that the correct course of action is followed.

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