You have been working hard at clearing your credit report to improve your credit rating it is part of your plans to buy a home or a new vehicle. The disappointment when your application for a new loan is declined because of a bad debt listing on your credit report. The creditor sold an old prescribed account to a debt collections company that claims you must pay. That debt was revived after the prescribed date and listed with a negative balance and a last payment reflects on the date the data were captured by the debt collections company knowing you never made that payment. The dispute is now proof you did not make that payment, and the debt prescribed. It is so important to draw a credit report every year print the copy and keep it for 7 years, it is at the end of the day your only track record of accounts that prescribed.
South Africans have been misled by many companies collecting debt, putting pressure on uneducated consumers to pay money owing that has prescribed.
Consumer Debt Support share this information with all consumers to help them understand what prescription is and the legislation surrounding the prescription of debt – in Afrikaans we would say “verjaring van skuld”. It is important that you understand your rights, so you don’t get exploited to make payments on accounts you no longer have the obligation to pay, simply because the prescriptions law says so, as in the ACT 68 of 1969 and again enforced in the National Credit Act under sections 126B of the Prescriptions Act.
So, how does this act apply to the collection of your debt or old accounts that haven’t received any payment from you for three calendar years?
It happens to consumers almost every day that a creditor or debt collections agent calls you out of the blue and claims you owe them money, for example, R3400 for an account you opened 11 years ago and no payment has been made on that account in the last nine years! The aggressive collections person wants you to make a payment arrangement and sign their acknowledgement of debt. If you don’t adhere to their demands, they simply threaten to issue you a summons.
Here are the facts.
- If the creditor made no contact with you over a period of three calendar years to collect the debt and can’t prove that they did indeed make contact with you, the debt prescribed.
- The creditor needs to prove they did indeed contact you verbally, or written acknowledgement of debt must prove this by sending you such a recording or your email or a letter submitted to the creditor. A WhatsApp is not proof as there is no verification of your details, the creditor needs to prove the communication was between them and yourself and you verified your details.
- The recording and the email letter must contain personal details verified by you and the account details and the date of the call. If this can’t be provided, the debt prescribed.
- If there was a payment arrangement nine years ago and you defaulted on that payment another three years and there is no proof of contact to make further payment arrangements, the debt prescribed.
- Where the creditor did not issue a summons or obtained a default judgement, the debt prescribed three calendar years.
- School fees accounts are commercial agreements and prescribes three years and not 30 years as you are quite often misled by schools.
For more information and assistance with a debt review removal, please contact us at debtcenter.co.za and leave your details on our “connect with us” space for a call back. If we can help you, we shall do the clearance certificate for you. The Vanvuuren https://www.debtcenter.co.za/contact-us/
You the consumer must request the proof of debt interruption during the three years to be provided by the debt collector who now owes the debt book or the creditor and their debt collections departments to you to proof the debt did not prescribe. You have the right to dispute information that is not true.
- Did not make any payment.
- Did not admit the debt owing during the three years – verbally or in writing.
- The Lender did not obtain a default judgement.
- If the claim is a summons and was issued, such a summons lapse after ONE year if not actioned further.
Debt that prescribes after 3 to 30 years:
- TAX, home loan judgements – 30 years
- Magistrates Court Section 58 judgement – 30 years
- Debt to the State – 15 years
- Negotiable Instrument Debt, such as cheque accounts – 6 years
- All other debt – 3 years.
Debt, including debt counselling fees, legal fees and costs with attorneys, aftercare of a debt counselor, registered credit providers, mobile accounts and Telkom accounts, prescribe after three years.
Debt review is a debt restructuring order and not a judgement and therefore the debt can prescribe if not paid after three calendar years.
Any default judgement interrupts debt prescription. A default judgement is not a summons issued by the attorney(s) of the creditor. The summons is unopposed and therefore the default judgement granted by the court stipulates the consumer owes the creditor(s) the money for the loan and the costs of the order and service of the summons.
Debt interruption disputes:
It often happens that a credit report or a creditor claims a payment was made in three years and the consumer disputes the allegation as not true.
- Did not make the payment, request the proof of the said payment, as sometimes its internal service fees reversed that was overcharged.
- Did not admit owing the debt, proof the consumer admitted verbally in the form of a clear recording that stipulates the date of the recording and the confirmation of your details, name, surname and ID number and confirmation of mobile number and email address. Or the proof of written document acknowledging the debt.
- No legal action – proof of the summons and proof of service to you in person by the sheriff of the court, a copy where you signed for the summons. If you were not served in person there is no summons served on you.
Does the selling of a consumer’s debt to a debt collector revive or interrupt the debt that has prescribed already?
Section 126 B(1)(b) stipulates that it’s illegal to collect debt after it has prescribed.
- Cannot collect debt that has prescribed.
- Debt cannot reactivate after prescribed.
- Selling a debt book to a debt collector does not reactivate or interrupt the prescription of the debt.
PRESCRIBED DEBT CANNOT BE COLLECTED FROM A CONSUMER
If you are a victim of this malpractice, you need to stop that payment immediately, as the business cannot force you to pay prescribed debt.
You can lodge your complaint with the COUNCIL FOR DEBT COLLECTORS https://www.cfdc.org.za/
The council for debt collectors is regulated where you can search the registration of a debt collections company and confirm if they are actually debt collectors and not a scam CFDC | Debt Collectors Register https://www.cfdc.org.za/active-register/
Section 126B(1)(b)(ii) is clear the consumer has the duty and the responsibility to connect with the creditor and to request the prescription or paid-up letter. Must be raised by the consumer as this duty is not the duty of a third party.
No court can reactivate the debt in a court order. If an order was granted and there is clear evidence the debt was prescribed, the information must be brought to the court’s attention and the order must be rescinded.
No creditors can reactivate outstanding debt on a loan or store account, etc. Once debt has prescribed, it has prescribed, and that is that.
Obtain a free credit report from TransUnion, Experian, XDS or MyCreditCheck, as all credit bureaus are linked to their portal. Access a reputable portal to assist with a credit report that is accurate and up to date.
How to calculate prescription:
The date of the debt default is the date of debt prescription, plus one day. Your debt was last paid 3 April 2018 – the date of prescription starts 4 April 2018 and on the three years, calculated, 4 April 2021, the debt legally prescribed and the creditor cannot collect on that debt any longer.
Prescription is a huge problem facing many consumers, from all walks of life. Debt collection companies collecting debt that has prescribed, is illegal. You can report this behavior to the debt collections associates to assist with the unlawful collection enforcement of outstanding debt. The National Credit Regulator cannot act against a creditor that has sold the debt book to a third party and collecting debt that has prescribed. Debt Collection companies have their own governing body for their industry.
South Africans need to have ample information regarding the prescription of debt and how to approach this sensitive issue and obtain the documents required for credit bureaus to update accordingly.
Thank you for the information.
This is great, thank you so much!