Prescribed Debt: How To Get Rid Of The Burden Of Old Debt
Are you battling with prescribed debt and uncertain about the legal protections available to help you break free? The Prescription Act in South Africa limits how long creditors have to pursue legal action to collect money owed. Simply put, it means that after a certain period, usually three years, debts become unenforceable, offering a safeguard for consumers.
In this blog, we’ll break down how the National Credit Act can protect you from creditors trying to collect prescribed debt in South Africa. From understanding exceptions and nuances to learning how to prove prescribed debt and navigating the legal grounds for its defence, our blog equips you with essential insights.
What Is Prescribed Debt?
Prescription is a legal concept dealing with the expiration of debt that operates within the intricate framework of the Prescription Act 68 of 1969 and the National Credit Act. These rules set out the conditions under which a debtor’s liability fades away over time, usually after three years for contractual and civil debts; examples of these types of debts include credit cards, personal loans, vehicle loans and retail accounts.
Generally, debt older than 5 years in South Africa cannot be collected. However, when it comes to loans such as mortgages or tax-related debt, it may take as long as 30 years to be considered as a prescription example.
Exceptions And Nuances
According to prescription law, certain debts, like those supported by court judgments or secured by mortgaged bonds, may only expire after a lengthy 30-year period. The crucial question to unpacking the prescribed debt meaning is: Can creditors legally pursue the collection of a prescribed debt? According to the Ombudsman for Banking Services, credit agreements, such as overdraft facilities and mortgage loans, enjoy protection, while debts outside the Act’s scope may lead to legal action by creditors.
The National Credit Act emerges as a crucial shield for consumers, preventing banks from collecting or selling debts that have reached the prescribed stage. This protective measure provides debtors relief from payment obligations and empowers them to update their credit profiles accordingly. Prescription interruptions, like debtor admission, payment, or the issuance of a summons, have the potential to reset the prescription clock.
How To Prove Prescribed Debt
Proving prescribed debt is a vital step to ensuring your rights and financial well-being. To do this effectively, you would need first to get familiar with the rules surrounding prescribed debt and find out the specific timeframe the law allows for pursuing the specific debt you owe legally. If this time has elapsed, the debt becomes prescribed, and you have the chance to prove it. In order to do this, you will need to collect important documents like statements and correspondence to prove the last activity or acknowledgement of the debt.
You will also need to check if the creditor has tried to communicate about debt collection recently. If there’s been no acknowledgement within the allowed time, it makes your case stronger. If needed, you will need to write a formal dispute letter with the evidence you collected and keep detailed records to support your efforts in proving that your debt is prescribed. For personalised guidance, we recommend seeking advice from a legal professional.
Requirements For Prescribed Debt To Be Fulfilled
To qualify as prescribed, a debt must meet three criteria within the past three years: no admission of owing, no payment made, and no issuance of summons. Yet not all debts follow this timeline, with specific categories like mortgage bonds and judgments having extended periods.
The National Credit Act plays a pivotal role, prohibiting creditors from pursuing prescribed debts falling under its jurisdiction. For debts outside the NCA, consumers can successfully raise the prescription of debt as a defence, except when mere acknowledgement without payment is involved. If you believe your debt has become prescribed, proactive communication with the credit granter is essential. If confirmed, you’ll be relieved from further liability.
However, if not prescribed, collection efforts continue, potentially leading to legal action. Challenging disputed debts on your credit profile is your right; log a dispute, get a reference number, and engage the Credit Ombud if needed. By understanding prescription debt in South Africa, consumers are armed with the knowledge to navigate their financial responsibilities effectively.
How To Apply For Prescribed Debt
Dealing with prescribed debt can be intricate, and it’s vital to understand the necessary steps for effective management. While the following guidelines provide a general overview, remember that seeking legal advice tailored to your unique situation is essential for a more precise and personalised approach.
1. Check Prescription Status
Before taking any steps, confirm whether the debt is prescribed. Obtain a copy of your credit report online through Experian or TransUnion to verify its status. This report reflects the date of the last activity so you can see how much time has elapsed and if this specific debt is eligible for prescription.
2. Cease Acknowledgment of The Debt
Refrain from acknowledging the prescribed debt to prevent restarting the prescription period. Avoid making payments, sending written acknowledgements, or committing to repayments.
3. Consider Consulting a Legal Professional
Seek advice from a legal professional tailored to your situation. The laws surrounding prescribed debt can be intricate and vary depending on the type of debt in question.
4. Dispute the Prescribed Debt
If you believe the debt is prescribed and the creditor is pursuing collection, dispute the debt. Provide evidence of its prescription status and communicate this with the creditor.
5. Maintain Detailed Records
Keep thorough records of all communications with the creditor, including letters, emails, and phone calls. This documentation can prove valuable in case of disputes or legal actions.
How To Remove Prescribed Debt From Credit Report
Now, you might be wondering, “If my debt is prescribed, why is it still haunting my credit report?” Good question. The persistence of these debts on your report can be attributed to various factors, but it often boils down to inaccuracies or oversight in the reporting process. If you find yourself facing a prescribed debt that shouldn’t tarnish your credit history, you have the power to rectify the situation. Here’s how:
- Identify the Culprit: Begin by identifying the specific debt that you believe is incorrectly categorised as prescribed. Take a close look at your credit report to pinpoint the problematic entry.
- Contact the Credit Bureau: To dispute a prescribed debt on your credit report, contact one of the credit bureaus, whether it is Transunion, Experian, Compuscan, or XDS.
- Raise a Prescribed Debt Dispute: Upon connection, dispute the prescribed debt with the credit bureaus by furnishing details and supporting evidence that challenges the accuracy of the reported information.
- Stay Proactive: Keep tabs on the progress of your dispute. The credit bureau will investigate the matter and work towards resolving any discrepancies in your credit report.
How To Get Your Debt Written Off In South Africa
If you haven’t acknowledged a debt in the last three years, whether by making a payment, committing to pay in the future, or being legally summoned for it, you can use the Prescription Act of South Africa to reject payment. However, many people are unaware of this legal protection, and collectors frequently use clever strategies to deceive individuals into giving up their right to prescribed debt.
Watch Out for Tricky Debt Tactics
Collectors might employ misleading tactics, like presenting hypothetical scenarios such as, “Would you pay if you won the lottery?” A simple agreement from you could be interpreted as an admission of the debt, undermining your defence based on the statute of limitations. Furthermore, certain collectors may push you to make minor payments, jeopardising your rights under the statute of limitations. Keep in mind that you have the right to a complimentary annual credit bureau check, so make sure to exercise this right to stay well-informed.
Legal Grounds For Prescribed Debt
When a prescription is invoked, collectors are expected to stop their collection attempts. Collectors can pursue prescribed debt collection, but consumers can use prescription as a defence. Despite this, some may persist and resort to threats of blacklisting. It’s important to understand that the National Credit Act prohibits listing prescribed debt, making such threats invalid and unfounded. Collectors can pursue prescribed debt collection, but consumers can use prescription as a defence.
Stand Your Ground Against Prescribed Debt
In the face of prescribed debt, stand your ground. Politely notify the collector that the supposed debt has expired, and unless proven otherwise, ask for your file to be closed to avoid additional harassment. Keep a written record of your communication for reference. If their persistence continues, request evidence such as the original contract, proof of the default date, the amount transferred, and a detailed breakdown of all related costs and interest. Without proper substantiation, express your readiness to confront the issue in court.
Transform Your Finances with National Debt Advisors
Are you feeling overwhelmed by the burden of prescribed debt that is hindering your financial freedom? If you’re searching for ways to break free from the weight of your debts, consider the empowering solution provided by National Debt Advisors. Our experienced team, comprising over 30 debt counsellors and 300 support staff, is prepared to lead you toward a more promising financial future.
National Debt Advisors extends a helping hand through legal debt counselling, specifically designed to aid consumers facing over-indebtedness under the National Credit Act. Take advantage of a complimentary debt assessment, safeguard yourself from legal actions, enjoy reduced monthly payments, and receive expert guidance until you achieve freedom from debt.
Take the first step towards financial freedom and get rid of prescribed debt today; contact National Debt Advisors now.