What is prescribed debt in South Africa?
Prescribed debt is old debt that has been written off once the prescription period has ended. This means that legally, creditors cannot collect debt or send a summons for debt that has prescribed from you. This is because of the amendments that were made to the National Credit Act in 2015 that prohibits collection, resale and reactivation of prescribed debt.
But before you break out the champagne, it's important to understand the strict criteria that must be met for a debt to be considered prescribed.
So how can you determine if you have prescribed debt in South Africa?
Here are some indicators:
- Your debt is older than the prescription period, which is typically three years.
- You have not acknowledged to creditors that you are liable for the debt.
- You have not made any payments towards the debt in the past three years.
- The creditor has not reached out to you during the prescription period, meaning they have not sent a summons or demanded payment.
It's crucial to meet all of these criteria for your debt to be considered prescribed.
A prescription period explained
While it is common for a prescription period to last three years, there are instances where it extends beyond that timeframe. These instances include, but are not limited to:
1. Mortgage (home) loan - can only be considered prescribed after a period of 30 years.
2. Debt resulting from a court judgment - can only be prescribed after 30 years.
3. Debt relating to taxes or levies under any law - can only be prescribed after 30 years.
These scenarios highlight the importance of understanding the specific prescription periods for different types of debt in South Africa.
Debt that does fall into the three year prescription period includes, but is not limited to:
- Credit card debt
- Personal loans
- Cellphone contracts
How can I check if my debt has prescribed and how do I prove prescribed debt in South Africa?
Determining if your debt has prescribed in South Africa can be a challenging task. Unfortunately, there is no straightforward method to check if your debt has prescribed, and you won't receive any notifications when it does. However, prescribed debt can be a powerful tool to have your debt written off, but only if it meets the specific criteria.
If you suspect that you may have prescribed debt, it's essential to reach out to the creditor involved. Request that they remove any data related to the debt, citing the fact that it has prescribed. This defense can be used if you haven't been notified about the debt or haven't made any payments towards it for more than three years.
Are you in a situation like this? Don't hesitate to contact your creditor and inform them that the debt has prescribed, urging them to take appropriate action. Remember, meeting all the criteria is crucial for your debt to be considered prescribed and written off.
My debt has prescribed, but it’s still showing on my credit report
If this is the case, you can contact the credit provider directly and ask them to remove the debt. As was mentioned above, your reason for asking them to remove it would be that the debt has prescribed.
If this doesn’t work, you can approach the credit bureau (TransUnion or Experian, for example) and lodge a dispute.
The credit bureaus will open an investigation and check whether:
- Creditors have acknowledged the debt and tried to contact you.
- If you have acknowledged the debt or paid any amount during the prescription period.
- If any legal action has been taken regarding this debt.
Creditors or debt collectors are harassing me about a prescribed debt, what can I do?
Tell them your debt has prescribed. If they continue harassing you, ask them to provide evidence that your debt has not prescribed. It’s important to ensure this process is documented. You should save emails, for example.
It’s also important here to not ask for a settlement amount or pay anything towards a prescribed debt as this will be seen as acknowledging the debt. Acknowledging a debt is considered interrupting a prescription period which will mean that you will still be liable to pay that debt.
Can I just wait for my debt to prescribe without paying it?
You can’t just let your debt accumulate and wait for the prescription period to end to have it written off. Please note that creditors will usually send you warnings to pay your debt which means it has been acknowledged. If you’ve also received a Section 129 Notice (letter of demand) regarding this debt, you should NOT ignore it as this is the last step a creditor has to take before taking legal action against you.
Read: What is a Section 129 Notice?
What can I do if my debt has not prescribed, but I can’t afford to pay it?
You can undergo a process called debt review. By going under debt review, you will protect your assets, like your home and car, from being repossessed. With debt review, you can reduce your monthly debt repayment so that you can actually afford to pay for your debt.
Fill in your contact details to have one of our knowledgeable debt counsellors contact you. Don’t worry, you don’t have to commit to anything yet. We’ll walk you through it, and you can decide whether it’s something you want to take on or not.
Would you benefit from Debt review?
Read: Debt counselling | Everything you need to know
All my debts are paid up, and the debts that aren’t have prescribed, but I still have a debt review warning on my credit report
We can issue you with a debt review clearance certificate and remove this debt review flag from your credit report.
