Many South African consumers are unaware of the fact that their debt could be written off if credit providers neglect to collect money that is due to them. When your debt is old, it is called prescribed debt.
After amendments made to the National Credit Act in March 2015 it became illegal for collectors to go after this kind of debt, but up until this change came about, creditors could still chase down these debts until the debtor invoked prescription protection. On some occasions, consumers would be tricked into admitting to their debt, taking away any chance of protection as they have acknowledged it. If a debtor makes a payment towards a prescribed debt, they unwittingly forfeit the prescription defense and will become liable for the debt, including years of interest and fees as well.
To ensure that you never fall into this trap, we, at National Debt Advisors (NDA) have all the information you need to find yourself on the right side of prescribed debt.
What is prescribed debt?
Prescribed debt is, in short, “old debt”, that has not been acknowledged or paid within three years*.
When is debt eligible to be deemed prescribed?
If after three years* a credit provider does not communicate with you, demand repayment or start taking legal action against you for payment, a debt becomes prescribed. This will mean that the debt will be cancelled and the credit provider will not able to claim repayment for this debt.
How long before debt is prescribed?
Each type of debt is different, which is why different debts have different time spans before it is deemed prescribed.
Will prescribed debt reflect on my credit report?
Once debt is deemed prescribed, it must be removed from your credit report.
How to remove prescribed debt from my credit report?
If you find that the credit provider did not remove your prescribed debt from your credit report you may want to:
- Contact the credit provider directly and request to have the debt removed from your credit profile
- Contact credit bureaus such as TransUnion and Experian and lodge a dispute which will request that they remove the debt from your credit profile. The credit bureau will then open an investigation. They will have 20 business days to find evidence that proves that the credit provider attempted to contact you. If none is found, they will then have to clear the debt from your credit report at the end of the 20 days.
When will prescribed debt not apply?
- If you acknowledge the debt
- If you make a payment on the debt
- If the creditor takes legal action against you
- If you reside outside of South Africa
- If you did not move or change your contact details
- If you are married to the credit provider
- If you are business partners with the credit provider
A credit provider is demanding payment on prescribed debt. What do I do?
It is against the law for credit providers or debt collectors to demand payment on prescribed debt. In this case you can:
- Refuse to pay and use the prescription as a defence until the debt collector proves that the debt, is in fact, not prescribed
- If the debt collector continues to demand payment of prescribed debt, be sure to fill out our contact form and we will contact you about your options
*depending on the type of debt.