Prescribed debt refers to old debts that have been around for a while without being acknowledged or paid. Once a debt is deemed “prescribed,” debt collectors are not allowed to chase after you for it. Now, let’s get into the nitty-gritty details.
Prescription is a legal concept that deals with the expiration of debt. This operates under the Prescription Act 68 of 1969 and the National Credit Act, forming the rules that dictate when a debtor’s liability fades away. Typically, this happens after three years for contractual and civil debts. Examples of these debts include credit cards, personal loans, vehicle loans, and retail accounts. In South Africa, debts older than five years are generally off-limits for collection. However, for loans like mortgages or tax-related debt, it may take as long as 30 years for them to be considered as prescribed.
Prescription Periods for Non-government Claims:
- Debt secured by a mortgage bond or related to a court judgment prescribes after 30 years.
- Debt related to a negotiable instrument (like a cheque or promissory note) prescribes after 6 years.
- Debt arising from delict or contract (including other liabilities) prescribes after 3 years.
- If you possess something, like land, for 30 years without interruption, you become its owner.
- Motor vehicle accident claims have specific timeframes for lodging claims and issuing summonses.
Checking Prescription Status
To determine if your debt is prescribed, follow these steps:
- Obtain a credit report to see the last activity on the debt.
- Check if the debt falls within the legal timeframe for prescribed debt in South Africa.
It’s essential to be aware that while prescribed debt prevents debt collectors from pursuing you, it doesn’t erase the debt itself. The legal status changes, but the moral and ethical responsibility to settle outstanding debts remains. It’s advisable to stay informed about your financial obligations, consider seeking professional advice if needed, and take proactive steps to manage your finances responsibly. Being aware of your rights and responsibilities is key to maintaining a healthy financial life in South Africa.
