Your debt can expire after 3 years. If a consumer does not interrupt prescription by acknowledging the debt or making payments towards the debt during the three-year period the debt will expire.
Phillip Nortjie, a debt counsellor, says: “The law states that if a credit provider does not issue a summons and serve it on you at the correct domicilium address, or obtain judgment against you within three years of you defaulting on payment of an account, you can rely on the defense of prescription by stating that the claim has lapsed or expired. In other words, if no payments were made, no promises to pay were made, or you did not admit that the debt existed during the three-year period, prescription sets in.”
Most consumers are not aware that the national credit act (NCA) does state that it prohibits the collection of and sale of the prescribed debt. The following section was inserted in the NCA after section 126A:Section 126B: Application of prescription of debt.
(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 defense of prescription, or would reasonably have raised the defense of prescription had the consumer been aware of such a defense, in response to a demand, whether as part of legal proceedings or otherwise.’
Consumers must also be aware that not all debt prescribes after three years. Retail debt relating to credit cards, personal loans, gym contracts, cellphone accounts, electricity accounts and school fees, prescribes after three years. However, debt relating to home loans, money due to the South African Revenue Service, municipal rates and TV licences prescribes after 30 years. So, before you decide to acknowledge or pay towards this debt, let us know and we will assist you on the right path.
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