A Fin24 reader wants to know if she could claim for prescription of debt as creditors have not, since 2017, made any attempt to collect on her debt. She writes:
I joined debt review in 2012 and paid it from then until April 2017, I have not paid a cent from April 2017 until now, which is May 2021.
My question is: Since 2017 until now, my creditors have not made any attempts to collect on my debts and I also have not acknowledged the debts in any way - can I claim for prescription of debt from creditors and with regards to the debt review status? And how do I go by removing it from my credit record?
Renee Marais, registered and independent debt counsellor with the NCR responds:
If you have not paid any debt for a period of three years, the debt prescribes in terms of the National Credit Act and the Prescription Act.
It means the debt is extinguished. It may not be sold or collected upon after it has prescribed. You calculate prescription in the following manner: The last day of the last payment counting three years plus one day. For example: Your last payment was on 1 January 2016, the debt prescribed on 2 January 2019. It does, however, not apply to a home loan.
It works as follows:
a. Prescription can be reactivated or revived if you pay something, if you admit liability or if there is a judgment before the three years' prescription time frame.
b. Judgment debt prescribes after 30 years.
c. Credit providers who do not report correct information to credit bureaux regarding prescription should be referred to either the Banking Ombud for a banking institution, Credit Ombud for any other credit agreements, the National Credit Regulator or the FSCA.
d. Credit bureaux who do not report correct information can also be referred to the Credit Ombud or the National Credit Regulator after a dispute process through their own complaint processes failed.
f. If anyone reports information that is incorrect or untrue you have recourse to be reimbursed for the costs to have your credit record repaired in terms of the law and it can be done via a lawyer.
Right to access and challenge credit records and information:
1. Every person has a right to be compensated by any person who reported incorrect information to a registered credit bureau or to the National Credit Register for the cost of correcting that information.
2. If the debt has prescribed there is no payment to be made anymore to anyone, not the credit provider, not an agent, not a debt collector or a lawyer.
3. I would suggest you pursue prescription first before considering using your savings to pay any debt that might have prescribed, or enter into sequestration.
4. The debt review can be removed from your credit record by the issue of a form 19 Clearance Certificate citing prescription if you have a debt review order by any registered debt counsellor. (No one else can issue a clearance certificate or exit you from debt review in this manner).
5. If you do not have a debt review order, point 4 above applies or you can file an application in court to find that debt review is no longer required due to prescription.
I am not a lawyer and my response is based on my more than 12 years' experience as a debt counsellor. The advice is not to be seen as legal advice. If you require legal advice, please consult a lawyer.
*Questions may be edited for brevity and clarity.
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