Please do not get me wrong, I am in no way advocating absconding from your responsibility of paying your debt. But, there are debts which you are simply not legally bound to pay.
After having to buy new winter uniforms, new stationery ( because the stationery gremlin has eaten all the stationery I sent to school with my child with at the beginning of the year) and tons and tons of multivitamins and flu medication, which truthfully have very little effect on my simply over-worked , motherly body – I am completely overjoyed that there is something like prescribed debt!
What exactly is prescribed debt? According to the Prescription Act 68 of 1969, section 10 (1), a debt is prescribed if:
• You have not acknowledged the debt in the past three consecutive years, either in writing or verbally
• You have not made any payment towards the outstanding amount, nor have you promised to pay
• The creditor has not summonsed you for this debt within three consecutive years
In many cases, the debt has been written off by the initial credit provider and bought for virtually nothing by debt collectors. There is nothing unlawful about a debt collector calling you to collect on a prescribed debt. The onus is on the consumer to know what your rights are with regard to this. And now you do too.
Prescribed debt is normally followed up many years after the initial debt was incurred. The request for payment is often accompanied by a threat to blacklist the consumer if the debt is not paid. This threat carries no weight, as a prescribed debt may not be listed on your credit profile at a credit bureau.
Here’s an example: In 2005 you owed a creditor R2 000. In 2013, a debt collector calls you and says that with interest and admin costs, you now owe R10 000.
1 The first thing you do, is find out when last payment was made on the account. Following that, you ask if a summons was ever issued for this debt.
2 If no payment has been made on that account for three years and no summons has been issued for that debt within the last three years – then that debt is prescribed and you are not legally bound to repay that debt.
3 Once you mention to a debt collector that you know your debt has prescribed and that you are aware that you are not legally bound to pay them, they should leave you in peace. If a debt collector pursues you even though you have told them of the prescription, ask them to supply you with a full statement of your account including all payments made – and to clearly show where you have made a payment in the past three years. As a consumer, you have the right to a detailed statement when you request it.
4 And very importantly, whatever you do, do not make an arrangement to pay an old debt – because this revokes the prescription even if the arrangement to pay is done verbally!
A bond account, municipal accounts, monies owing to SARS and your TV licence – cannot become prescribed debt. But retail accounts, credit cards, phone and cellphone accounts, personal loans, gym memberships, money owing on vehicle finance all become prescribed after no payment or summons issued within three consecutive years.
So when someone calls you and wants you to pay a prescribed debt – be they from any collection agency, the FBI, the CIA, from Mars – you simply say, in your sweetest voice “I am sorry, but this debt has been prescribed. Please do not bother me again”. Then you rightly take your place on your couch – enjoy a good movie – and wait until the next LEGITIMATE debt collector calls.
- Moeshfieka Botha of Credit Matters Debt Counselling