Have you ever wondered what happens to your old debts? It is possible for old debts to fall away, given that a certain checklist is met. We call these prescribed debts. Let’s have a look at how debt becomes prescribed and what you should do if you believe you have prescribed debt.
When Does A Debt Become A Prescribed Debt?
If you owe a debt to a credit provider who:
a.) has not contacted you to demand payment,
b.) has not taken legal action against you or
c.) tried to communicate with you in any way for a period of three or more years, that debt becomes prescribed.
Once the debt is prescribed, the credit provider may no longer try to claim back nay money on that debt in the future.
Prescribed debt only applies if you have not changed address or contact details in that period without notifying the credit provider. If this was not the case one could go into hiding for three years and not have pay any of your debts back, and that is not the point. Prescription will not apply if the credit provider can prove that they had tried to contact you during the period.
Do Prescribed Debts Appear On Your Credit Report?
Once a debt is prescribed, the credit provider needs to write it off. The credit bureaus should also remove it from your credit report. If you have prescribed debt that still appears on your credit report you need to do two things. Firstly, contact the credit provider and ask them to remove it from your credit report. Secondly, contact the credit bureaus and submit a request dispute and request to remove the prescribed debt off your report.
What Can Make The Prescription Claim Invalid?
If you acknowledge the debt or make a payment towards that debt it is no longer prescribed. You basically reset the whole three year time period. If a credit provider takes legal action against you the debt cannot be prescribed. Legal action has the same effect as the credit provider contacting you for payment. If you are living outside of South Africa the debt cannot be prescribed.
What Should You Do If Somebody Is Trying To Claim On Prescribed Debt?
It was a victory for consumer when the Amendments to the National Credit Act (NCA) in 2015 made it illegal for any credit provider or debt collection agency to try and collect on prescribed debt. Prior to this debt collectors used to buy old debt books for a fraction of the price and try to collect as much as possible using various, and sometimes questionable, tactics.
If someone approaches you trying to claim on the debt that is prescribed you need to use prescription as a defence. They may only have a case if they can prove that the debt is not prescribed. It is important that you know your rights as a consumer. Don’t allow anybody to take advantage of you because you have been misinformed. Debt counsellors are debt experts and are often knowledgeable in these sorts of disputes.
The credit bureaus can also assist you with any disputes and questions you may have regarding your debts and your credit score. You can also submit complaints and query directly with the National Credit Regulator (NCR).