Too many South Africans are unaware of what prescribed debt is – never mind how it can be used in their favour. For one thing, it can get those harassing creditors off your back once and for all. For another, it can turn things around for your credit score and put you back in reasonably good standing with other creditors.
While it isn’t recommended that you go out and try to hack this legal protection in order to escape blacklist status or apply for new debt, when you’re already deeply indebted, laws on prescribed debt can be a strong defence against unscrupulous creditors.
Find out more about the role that prescribed debt plays in South Africa.
What Is Prescribed Debt?
It turns out debt has an expiry date! In the case of most consumer debt, this is a period of three years. According to South Africa’s Prescription Act 68, a debt is written off as prescribed, if it meets the following conditions:
- Your creditor has failed to verbally or in writing acknowledge the existence of the debt.
- You have not made a debt repayment on this particular debt in the last three years.
- You have not received a summons regarding this debt within the three-year period.
What Qualifies As Prescribed Debt?
Consumers can trace the majority of their prescribed debt to contractual credit agreements that are written off after three years. This can include:
- Store accounts
- Credit card accounts
- Personal Loans
- Gym memberships
- Subscription services
- Vehicle finance
- Cell phone contacts
- Fibre, broadband & landline contacts
How To Prove Prescribed Debt
If you’re being hounded by a creditor over a debt that is over three years old, you can point out that the burden of proof lies with them. Unless they can prove that they attempted to notify you about this outstanding debt within three years of you taking out this credit with them, you may refuse to pay. Keep track of any communication you have with the harassing creditor and request that they produce the following before you commit to repaying the amounts they request:
- The original loan agreement
- Proof you have defaulted on your loan
- The outstanding balance on your account
- Total interest incurred
- Evidence that your creditor has attempted to contact you within the prescribed three-year period.
Debt Management Made Easy With Supercompare
If your debts don’t currently fall under the conditions set in the Prescribed Debt Act 68 and you have lenders knocking down your door with court summons, it may be time to call in an expert. Talk to us about finding an accredited debt counsellor. A debt counsellor can help you drag your credit score out of the red and give you tools, with which you can better manage your lines of credit in the future.
Find out about debt management today!