Do you know what Prescribed Debt is?
Besides the abuse of women and children, death by starvation in African countries and people with loads of money but no taste – there is very little that gets me into a tailspin like debt collectors demanding monies for debt which is prescribed!
What exactly is prescribed debt? According to the Prescription Act, a debt is deemed to be prescribed if it has been three years since your last payment and in three years you have not acknowledged the debt in any way – and neither has the creditor summonsed you for it. That is it!
In many cases, the debt has been written off by the initial credit provider and bought for virtually nothing by debt collectors.
Unfortunately, onus is placed on the debtor to know that their debt is prescribed and use it as their defence when the debt collector comes – a – calling! So what I am saying is – the debt collector knows the debt is prescribed, but he will still call you, in the hope that you are unaware of this.
You owed Creditor X an amount of R5000 in 2006. A debt collector calls you in 2013 and tells you that interest has been added to the amount you owe creditor X and you now owe R12 000 and you have to pay.
First thing you do – ask when your last payment was made
Next thing – find out if you were ever summonsed
If no payment has been made on that account for 3 years and no summons has been issued for that debt within the last 3 years – then that debt is prescribed and you are not legally bound to repay that debt.
Now we all know how aggressive and intimidating debt collectors can be. But it does not matter if they tell you that they are from the CIA, the FBI or from Mars. It doesn’t matter if they threaten you with the loss of your possessions or blacklisting, if a debt is prescribed – you do not have to pay it!
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 last three years. As a consumer, you have the right to a detailed statement when you request it.
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.
As consumers we certainly have enough to contend with in our everyday lives - and enough to financially see to, that we still need to be worried about “old debt “ which we by law, do not have to pay. so, when a debt collector calls you about a prescribed debt – politely tell him that you know that the debt is prescribed and that you are fully aware that you do not have to pay them. And then watch them disappear into the far blue yonder!
A bond account, municipal accounts, monies owing to SARS and your TV licence – cannot become prescribed debt. But retail accounts, credit cards, Telkom accounts,personal loans, gym memberships, cellphone accounts, money owing on vehicle finance ALL become prescribed after no payment or summons issued within 3 years.
As consumers, we simply have to know what our rights are.
National Credit Regulator: www.ncr.org.za and 0860 627 627
Debt Counselling: www.creditmatters.co.za and 086 111 6197