Are you struggling with the issue of prescribed or un-prescribed debt? In this week’s blog, Consumer Debt Support (CDS) would like to share more on the topic of prescribed and un-prescribed debt. We receive daily calls from consumers who are in a panic state because debt collectors are calling them all the time with old debt and they do not know what to do. So, this week we want to venture into The National Credit Amendment Act, published 13 March 2015, which prohibits the sale and collection of Prescribed Debt.

We are all too familiar with debt collectors calling about accounts that’s old, and most likely have forgotten ever having that old account. It is usually a debt collection call centre operator that calls consumers at any time of the day and as late as 9 pm at night. These calls can be very upsetting especially when one is busy in a work meeting, or home starting to prepare dinner for the family or bathing the kids. The voice at the other end refuse to disconnect the call unless a commitment is made to pay every month. Before you make any payment arrangement in the future know your rights as discussed here below.

How does the new law affect old debt and what does this effect the consumer?

When debt has prescribed, how would you know if debt has actually prescribed and the debt collection company is collecting debt that has prescribed as per The New Amendment Bill or The National Credit Act 15 March 2017? How can consumers understand the Act of debt prescription better.

  • When the debt has not been paid for three full calendar years, you have not acknowledged the debt in the past three consecutive years, or made any payment promises in writing, or any verbal promises that were recorded by the debt collecting company — THE DEBT HAD PRESCRIBED.
  • When the creditor had not referred the matter to court to collect the outstanding debt in the three years that has passed and you have not been summonsed or default judgement been granted on the said debt. – THE DEBT HAD PRESCRIBED. This debt is then UNprescribed.

The following debt can prescribe as per The New Amendment Bill of The National Credit Act, 15 March 2017 give consumers the new Law on when debt had prescribed. The following unsecured, secured debt and service agreements can prescribe when applied correctly as per the Act.

  • Retails accounts – clothing store accounts.
  • Credit card accounts.
  • Personal loans accounts.
  • Telkom accounts
  • Mobile accounts
  • Gym membership accounts
  • Vehicle that was voluntary surrendered, before default judgement.

Debt that is excluded from the Act that can’t prescribe in three years. So, make sure your debt falls in the right rules for prescription:

  • A Mortgage bond gets registered at the deeds office; therefore, this debt can only prescribe after 30 years.
  • Municipality accounts can’t prescribe, neither can the outstanding or old debt of previous property owners be transferred to new property owners.
  • Any outstanding debts to SARS.
  • Outstanding television licence fees can’t prescribe. It is best that consumers contact the SABC and make payment arrangements, or send proof that they no longer have a TV licence, or proof that they are married and their spouse has a TV licence.

As consumers we all are affected by various circumstances that becomes the reason why one could not pay debts five or six years ago. It is the right thing to do to pay debt and it would not be right to stop paying debt when you know you have to pay it. But when old debt is being collected and all the arrears interest and collection fees are added, the account is very much no more a small outstanding balance, but a large amount that is now outstanding. In our opinion it would be wrong for a debt collector to collect that money and further add collection fees to an already escalated outstanding balance.

Consumers find themselves in difficult financial situations and can’t afford to pay their debts, due to no annual salary increases, retrenchments and other difficult situations.

Consumers should be aware of the legislation of the prescription act and when it becomes illegal for a debt collection company to collect debt that has not been paid for more than three years. In other words, if the date of default was 1 February 2012, and the creditor had not issued summons or contacted you and you made a promise to pay that debt, then the debt collector can’t collect the debt on 15 July 2017 as the debt has prescribed. The debt is no longer collectible and it will be unlawful to enforce a payment agreement on the consumer.

It is always the right of a consumer to request proof that a certain debt has not prescribed. The creditor or debt collector making such an allegation must proof the debt has not prescribed. Below you can find the following you can request before making any payment arrangements on any account older than three years.

  • The original contractual agreement.
  • Proof of default date and any letter sent with regarding to the default.
  • The outstanding amount on date of default.
  • The outstanding amount with arrears interest and fees included.

Knowing your rights should be enough to stop the debt collector from contacting you again. If the debt collector has the access of the information as for the documents to be sent to you, make no promise to make any payment until all the information can be looked through and be verified by yourself.

When the creditor or debt collector contact you in the period of three years and you made a payment or a promise to make a payment arrangement, the debt remains a valid claim and you are legally liable to pay the account.

In Conclusion:

Consumers should familiarise themselves with the Law and when debt has prescribed or not. One should pay more attention to the operator calling regarding outstanding debt that most likely could have prescribed. It is your money and your old debt so ask questions before making any payment arrangement. It remains the responsibility of the party calling to proof the debt had not prescribed. We hope this blog has added value to the issue if debt can be collected or not, and help you take control.

Visit our website, http://www.debtcentre.co.za CDS debt management professional will be on call during the Festive Holidays on our Whatsapp number: 0826412328. You need help with your debts? Wanting to know more about debt review? Unsure whether debt has prescribed? We are here for YOU to make life better.