Prescribed debt in South Africa has emerged as a crucial yet often misunderstood element in personal finance. In a country grappling with a significant debt problem, understanding prescribed debt is not just a matter of legal compliance but also a key aspect of financial empowerment. In this blog, we explore all things prescribed debt in South Africa. We unpack the prescribed debt meaning and how prescription law has redefined the boundaries between creditors and debtors through the prescription of debt. Whether it’s identifying when a debt becomes prescribed, navigating interactions with debt collectors, or even removing legal prescriptions from your credit report, we have got you covered.
What Is A Prescribed Debt In South Africa?
So, first things first, what is prescribed debt? Basically, prescribed debt in South Africa is old debts that haven’t been recognised or paid for a certain period, typically three years. Once this debt is considered ‘prescribed’, the law prohibits debt collectors from chasing it. This rule, which is enforced by the Prescription Act 68 of 1969, changed the way debt collection works in South Africa and is a key shift in how old debts are managed.
In the past, people in debt had to specifically claim ‘prescription protection’ to stop creditors from pursuing old debts. However, many didn’t know their legal rights and accidentally acknowledged the debt, losing their right to this protection. Besides acknowledging the debt, making a payment on an old debt reactivates the debt and makes you responsible for all the interest and fees that have built up over time.
Prescribed Debt in South Africa: Understanding Your Rights
The Prescription Act works hand in hand with the National Credit Act of 2005, later amended in 2014. The NCA took the premise of the Prescription Act in South Africa a step further and outlawed the pursuit of prescribed debt in South Africa, offering a safeguard for consumers. It also created a loophole for certain debt collectors to take advantage of unknowing debtors. These collectors often acquired such debts, aiming to make a profit by deceiving debtors into recognising these debts.
Prescribed debt is all about fairness and taking action on time. It’s there to shield you from unreasonably high interest rates and piled-up fees, especially when creditors haven’t been attentive. For you, as a consumer, it means some of your debts might just vanish because the creditor didn’t do their part, as long as you haven’t recognised or paid anything on that debt. Usually, this prescription period is three years for most debts. However, it can stretch up to 30 years for bigger debts like home loans or specific government debts.
Remember, you’re not legally required to pay off a debt that’s prescribed. So it’s crucial that you are careful when dealing with prescription debt in South Africa, and you should never acknowledge the debt or make payments on this kind of debt as it will make you liable once more. It is also important to keep an eye on your debts so you know which debts are prescribed in order to avoid making unnecessary payments.
When Does A Debt Become Prescribed In South Africa?
To classify a debt as prescribed and issue a prescribed letter, two main conditions need to be met. First, the credit provider must not have actively pursued the debt by claiming payment, sending a demand letter, or initiating legal proceedings. Secondly, the consumer should not have made any payments or acknowledged the debt in any form during a specified timeframe.
The number of years it takes for debt to become prescribed varies depending on the type of debt. For personal loans, credit cards, retail accounts, and vehicle loans, the timeframe is three years. Therefore, debt older than 5 years in South Africa is, most of the time, no longer collectable. However, for home loans, debts that are subject to court orders, and money owed to the South African Revenue Service (SARS), this period extends to 30 years.
Being careful when talking to debt collectors is crucial if you have prescribed debt in South Africa. Even if you accidentally acknowledge a debt, it can restart the time limit on when it can be collected. Debt collectors often use different strategies to make you acknowledge the debt, which then makes you responsible for it once more. If you feel that a debt collector is trying to take advantage of you, it’s a good idea to report these demands to the Council for Debt Collectors. Also, getting advice from organisations like National Debt Advisors (NDA) can help figure out if any of your debts have reached this prescribed status.
How To Apply For Prescribed Debt in South Africa
Managing prescribed debt can feel daunting, but it’s crucial to understand and exercise your legal rights to maintain your financial well-being. Under South African law, you have options to rid yourself of the weight of prescribed debt in South Africa. Let’s explore how you can do this effectively.
Prescribed Debt in South Africa: The Application Process
- Check Prescription Status: To check if your debt is prescribed, start by getting a credit report. This will show the last activity on the debt and if it’s within the legal timeframe for prescribed debt in South Africa.
- Gather Evidence: Next, gather any documents like statements or letters that show when you last acknowledged or paid the debt. If there’s been no activity in the allowed time, it helps your case.
- Cease Acknowledgment of Debt: It’s important not to acknowledge the debt, make any payments, or agree to repayments, as this can restart the prescription clock.
- Dispute Prescribed Debt: If you’re sure your debt is prescribed, but the creditor is still after you, formally challenge it. Show evidence that it’s prescribed and let the creditor know.
- Keep Records: Keep all records of your interactions with the creditor, including emails, letters, and calls. These are vital if there are disputes or legal issues later.
- Consult a Legal Professional: Seeking advice from a legal expert is a good idea, as the laws of prescribed debt in South Africa can be complex.
Other Factors to Consider
- If your prescribed debt is still on your credit report, you can dispute it. Provide proof to the credit bureau and follow up regularly.
- If you think your debt might be prescribed, it’s best to talk to the credit granter. Getting it confirmed can free you from liability, but if it’s not prescribed, they might keep trying to collect or even take legal action.
- Knowing the ins and outs of prescribed debt in South Africa can help you manage your finances better and avoid unnecessary burdens.
How To Remove Prescribed Debt From Credit Report
As you learn about your prescribed debt and how to get your debt written off in South Africa, you might find that sometimes, even if your debt is prescribed, it might still be on your credit report. Removing a credit report listing of your prescribed debt in South Africa is an important financial step to take if you’re dealing with old debts that legally should no longer be affecting your credit standing. Here’s a simple guide to help you through this process:
Step 1: Obtain Your Credit Report
The journey begins by pulling your credit report. You’re entitled to one free report annually from credit bureaus like TransUnion or Experian. This report will provide a clear picture of your current debt situation.
Step 2: Contact the Credit Provider
After reviewing your credit report, reach out to the credit provider of the prescribed debt in South Africa. It’s crucial to request evidence that the creditor has taken steps to prevent the prescription of the debt. Ensure that your inquiry clearly indicates that you do not acknowledge the existence of the debt, particularly if you believe it to be invalid. If the provider has made no effort to contact you regarding the debt in the past three years, it may be eligible for write-off.
Step 3: Log A Dispute About Prescribed Debt In South Africa
If you find that your prescribed debt hasn’t been removed from your credit record, you can file a dispute with credit bureaus. Inform them that you believe that you have prescribed debt in South Africa and should be removed from your record. Agencies like TransUnion, Experian, XDS, or Compuscan can be contacted for this purpose. Credit bureaus typically remove such debts from your record within 20 days. If, after this period, the debt remains on your record, it’s time to take further action.
Step 4: Contact the Credit Ombudsman
Should the debt persist on your credit report beyond the 20-day period, you have the option to approach the Credit Ombudsman. They can assist in resolving disputes regarding credit information and can be a valuable resource in ensuring your credit report accurately reflects your financial history.
How To Prove Prescribed Debt in South Africa
To prove that a debt is prescribed, you need to follow a specific process and meet certain criteria outlined in the Prescription Act 68 of 1969. Here’s how to go about it:
Verify the Last Acknowledgment or Payment: Determine the date of your last payment or acknowledgement of the debt. Prescription typically requires that there has been no acknowledgement or payment for three years for most consumer debts.
Gather Supporting Documents: Compile all relevant documentation, such as payment records, statements, and any correspondence with the creditor. These documents are essential to establish the history and status of the debt when proving prescribed debt in South Africa.
Notify the Creditor: Write to the creditor, presenting your evidence and stating your belief that your debt is prescribed. Clearly outline the absence of any payment or acknowledgement over the prescription period.
Handle Credit Report Discrepancies: If the debt appears on your credit report despite being prescribed, dispute it with the credit bureau, providing your gathered evidence to support the prescription claim.
Take Control of Your Financial Future with National Debt Advisors
Are you feeling overwhelmed by the weight of old debts? Do you need clarification on your rights regarding prescribed debt in South Africa? You’re not alone, and National Debt Advisors is here to guide you through the complexities of managing your debt.
Our team of experts is well-versed in the intricacies of the Prescription Act 68 of 1969 and the National Credit Act, ensuring you get the most accurate and up-to-date advice. Whether you need assistance in proving prescribed debt in South Africa, disputing credit report claims, or just understanding your rights, National Debt Advisors is here to help. Contact us today.
