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Prescription7A 

 

 

 

 

It is now unlawful for a credit provider to attempt to collect a debt that has prescribed or to sell a debt that has prescribed.

A debt prescribes - lapses - if a credit provider does not start civil proceedings in a court to recover the old debt within three years of the last payment.  Prescription5

This means: If, in the previous three years, a debt has not been acknowledged, no payment has been made, and no summons issued, it has prescribed and the debtor is no longer liable to pay it.

Before the National Credit Act was changed, prescription was interrupted if a debtor acknowledged the old debt or made a payment towards it, but it is now unlawful for a credit provider to even try to recover debt that has prescribed.

Source: Personal Finance 21 March 2015

 

What To Do If You Think Your Debt Has Prescribed: Debt Collector Scammers

Firstly, do not sign anything and do not admit that you owe money over the phone.

If you believe that the debt has prescribed and someone has bought that debt hoping to intimidate you into paying do the following. 

When they contact you ask them for a statement as you want an official document from them with their email address and their postal address.  The statement should give you this information. They don’t normally like to give it to you as they are not sure what you will be doing. They want to be in control.

When you receive the statement.

  1. Make sure their email address and postal address is included otherwise you will have to ask for it.
  2. Send an email and a registered letter

In the email and the registered letter state the following:

I dispute your claim and I am of the opinion that the debt is settled.

Please provide me with (i) a finalised agreement whereupon your claim is based as well as (ii) a comprehensive statement from inception of the debt whereupon you base your claim.

Keep the receipt of the registered letter so that you have proof of having sent it. Don’t forewarn them of the letter. If the case lands up in court you have proof that you requested proof from them of the so-called debt and if they are claiming it they must prove its existence. When you think that they have collected your letter (don’t be too hasty as the Post Office is not too fast here, and often does not even operate) request proof of the receipt that they signed to collect your letter. Keep it so that they cannot dispute later that they never received your registered letter. 

Remember never admit you owe money and never, ever sign anything. If anyone alleges that you owe money, they must prove it. 

ALWAYS DENY

NEVER ADMIT

In terms of South African law, a debt prescribes (falls away/expires) after three years (the period for a judgement debt is 30 years).

INTRODUCTION: 

Under the Prescription Act, there are different time frames for specific types of debts. For example, there are certain debts with a prescription period of only 3 years and this period begins when the amount becomes due.  Larger debts like mortgage or taxes have a period of 30 years. Consumers who are unaware of this clause in the Prescription Act end up paying for old debts which would include legal fees and interest charges. The Prescription Act prevents collectors from harassing the debtor however there have been cases when a person with a debt is fooled into agreeing to pay for an old debt. Under the Act, if a person admits to the debt, he is liable and must pay. Thus unscrupulous debt collectors have sometimes tricked people into admitting the debt through questions like, “If you won the Lotto, would you pay this debt?”

Prescription was introduced to protect consumers against unscrupulous creditors who delay the recovery of debt to incur huge costs and interest. Clearly, this kind of unscrupulous lending is unfair to the consumer.

If the debtor acknowledges the debt in writing, verbally or by payment, prescription is interrupted and payment must be effected. 

Debt Collector Tip2

So be careful what you admit or sign.  

The following two articles on the website perfectly sums up the prescription of debt and what you as a consumer should be aware of. It is highly recommended that you read and remember the content of both these articles.

1) When you can't be forced to pay

2) Know your rights to fight rogue debt collectors

Section 10 of the Prescription Act reads as follows:10. Extinction of debts by prescription.

(1) Subject to the provisions of this Chapter and of Chapter IV, a debt shall be extinguished by prescription after the lapse of the period which in terms of the relevant law applies in respect of the prescription of such debt.
(2) By the prescription of a principal debt a subsidiary debt which arose from such principal debt shall also be extinguished by prescription.
(3) Notwithstanding the provisions of subsections (1) and (2), payment by the debtor of a debt after it has been extinguished by prescription in terms of either of the said subsections, shall be regarded as payment of a debt.

 

This basically means that you cannot claim a debt once it becomes prescribed. Section 11 of the Prescription Act states which periods is applicable

11. Periods of prescription of debts.

The periods of prescription of debts shall be the following:

     (a)   thirty years in respect of
(i) any debt secured by mortgage bond;
(ii) any judgment debt;
(iii) any debt in respect of any taxation imposed or levied by or under any law;
(iv) any debt owed to the State in respect of any share of the profits, royalties or any similar consideration payable in respect of the right to mine minerals or other substances;

     (b)   fifteen years in respect of any debt owed to the State and arising out of an advance or loan of money or a sale or lease of land by the State to the debtor, unless a longer period applies in respect of the debt in question in terms of paragraph (a);

     (c)   six years in respect of a debt arising from a bill of exchange or other negotiable instrument or from a notarial contract, unless a longer period applies in respect of the debt in question in terms of paragraph (a) or (b);

     (d)   save where an Act of Parliament provides otherwise, three years in respect of any other debt.

So, for most debt the period is three years from the date that the debt became due and payable.

 

In other words, three years from the date that you were supposed to have paid. Section 13 states that prescription (the three year period) will not run under the following circumstances:

13. Completion of prescription delayed in certain circumstances.

(1) If:-

(a) the creditor is a minor or is insane or is a person under curatorship or is prevented by superior force including any law or any order of court from interrupting the running of prescription as contemplated in section 15 (1); or (b) the debtor is outside the Republic; or
(c) the creditor and debtor are married to each other; or
(d) the creditor and debtor are partners and the debt is a debt which arose out of the partnership relationship; or
(e) the creditor is a juristic person and the debtor is a member of the governing body of such juristic person; or
(f)  the debt is the object of a dispute subjected to arbitration; or
(g) the debt is the object of a claim filed against the estate of a debtor who is deceased or against the insolvent estate of the debtor or against a company in liquidation or against an applicant under the Agricultural Credit Act, 1966 (Act No. 28 of 1966); or
(h) the creditor or the debtor is deceased and an executor of the estate in question has not yet been appointed; and
(i) the relevant period of prescription would, but for the provisions of this subsection, be completed before or on, or within one year after, the day on which the relevant impediment referred to in paragraph (a), (b), (c),(d), (e), ( f ), (g) or (h) has ceased to exist,
the period of prescription shall not be completed before a year has elapsed after the day referred to in paragraph (i).

(2) A debt which arises from a contract and which would, but for the provisions of this subsection, become prescribed before a reciprocal debt which arises from the same contract becomes prescribed, shall not become prescribed before the reciprocal debt becomes prescribed.

Section 14 of the Prescription Act says that Prescription is stopped in the following circumstances:

14. Interruption of prescription by acknowledgment of liability

(1) The running of prescription shall be interrupted by an express or tacit acknowledgment of liability by the debtor.
(2) If the running of prescription is interrupted as contemplated in subsection (1), prescription shall commence to run afresh from the day on which the interruption takes place or, if at the time of the interruption or at any time thereafter the parties postpone the due date of the debt, from the date upon which the debt again becomes due.

In other words, if you sign an acknowledgment of debt or the Plaintiff had obtained civil judgment against you within that three year period, prescription does not apply.What you can do now, since prescription applies, is

1)  Inform the creditor (nicely) that the debt has prescribed. Prescription3

2)  Inform them that you do not intend to sign anything or pay anything.

3)  Inform them that if they issue summons, they must do so at your current address and you

     will defend the summons based on prescription and ask for legal costs against them.

4)  Also inform them that listing prescribed debt on a credit bureau is specifically prohibited by the regulations to the National Credit Act and any attempt to list you will result in a   defamation of character claim against them.

 

This the best part: 

As from 13 March 2015 a new section 126B was introduced into the National Credit Act 34 of 2005 -   Prescription6

126B. (1)

(a) No person may sell a debt under a credit agreement to which this Act applies and that has been extinguished by prescription under the Prescription Act,1969 (Act No. 68 of 1969).

(b) No person may continue the collection of, or re-activate a debt under a credit agreement to which this Act applies— 

                  (i)   which debt has been extinguished by prescription under the Prescription Act, 1969 (Act No. 68 of 1969); and

                  (ii)  where the consumer raises the defence of prescription or would reasonably have raised the defence of prescription had the consumer been aware of such a defence, in response to a demand, whether as part of legal proceedings or otherwise.’’