If you're grappling with prescribed debt on your credit report, it can hurt your chances of being approved for credit and loans.. In this blog post, we will delve into the world of prescribed debt and provide you with actionable steps on how to remove it from your credit report. Let's get started.
Understanding prescribed debt
Before knowing how to remove prescribed debt, you need to properly understand what it is.
Prescribed debt refers to debts that have exceeded their legally defined statute of limitations. In South Africa, this limitation is typically three years.
What happens when debt is prescribed?
Once a debt becomes prescribed, it can no longer be legally collected or enforced through legal action. This includes listing it on your credit report. However, prescribed debt can linger on your credit report, negatively impacting your creditworthiness.
What is the prescription rule in South Africa
- Your debt has to be older than the prescription period, which is typically three years.
- You have not acknowledged to creditors that you are liable or responsible for the debt.
- No payments have been made towards this debt in the last three years.
- A creditor has not reached out to you regarding the debt. They have not for example sent a summons or started the debt collections process.
Can you be blacklisted for prescribed debt?
There's no such thing as being 'blacklisted'. You can, however, have negative information on your credit report. In the case of prescribed debts, this can be in the form of defaults and debt collections for debts that have prescribed (been written off).
Steps to dispute prescribed debt from your credit report
- Verify the Prescription Date: The first step is to confirm that the debt is indeed prescribed. In South Africa, most debts are prescribed after three years. Check the date of the last activity or payment on the debt. If it's been more than three years, it may be prescribed.
- Request a Credit Report: Obtain a copy of your credit report from one of the major credit bureaus in South Africa, such as TransUnion, Experian, or Equifax. You are entitled to one free credit report per year from each bureau.
- Identify Prescribed Debt Entries: Carefully review your credit report for any entries related to prescribed debt. These may be labeled as "default," "collections," or "judgments." Note down the details of each entry, including the date of the last activity.
- Dispute the Entries: Write a formal dispute letter to the credit bureau reporting the prescribed debt. In your letter, clearly state that the debt is prescribed, provide evidence of the prescription date, and request its removal from your credit report.
- Follow Up: Credit bureaus are required to investigate disputes within a certain timeframe. Follow up on your dispute to ensure it is being processed. If the entry is not removed, you may need to escalate your complaint.
- Consider Legal Assistance: If the credit bureaus are uncooperative, you may want to seek legal assistance. An attorney specializing in consumer protection or credit law can help you navigate the process.
- Monitor Your Credit Report: Regularly monitor your credit report to ensure that the prescribed debt entry has been removed. It may take some time for the update to reflect on your report.
How to clear debt in South Africa?
In most cases, the only way to really clear debt in South Africa is to pay it off. If you are battling to pay off your debt, and your debt does not meet the criteria for being considered, prescribed, we can help you. We can help consolidate all your debt, and often reduce your monthly debt instalment by up to 50%. We do this with the legal process of debt review. Let's chat about how debt review can help you!
Can debt review be removed if debt has prescribed?
If you have paid up all your debt, and the debt you haven't paid has prescribed, you could be eligible to remove debt review.
Read this blog post to discover how you can be removed from the debt review process.