Debt is something that gives many of us sleepless nights especially when we have reached a point where we cannot manage it and do not have the means to do so. It is always important not to take debt that is over what you can afford as that can put you in a bad situation should you not be able to pay it off.
Pandemics like the covid-19 saw many people lose their jobs with some still unable to secure any even now. Many people wonder if there is a point where debt can be written off in South Africa and the answer to this is YES.
But wait, before you get too excited, here’s more that you need to know on the matter as provided by the RCS Group.
The answer depends on whether the debt is regarded as prescribed or not.
A prescribed debt is an obligation that has essentially “expired.” Usually, debt is said to have been prescribed when after three years have passed and the creditor or debt collector has not filed any legal action or requested payment of the outstanding balance. However, for loans like a mortgage or tax-related debt, it can take up to 30 years to be regarded as prescribed.
In the past, creditors would frequently overlook a debt, let it accrue interest, and then start collection efforts when it had grown to a substantial amount above the original balance. Consumers who were not aware of their rights during this process were required to pay exceptional sums. It was the legal obligation of the consumer to present the prescription as a defense.
This was the case until the National Credit Act 34 of 2005.
The most popular strategy debt collectors use to make sure the debt doesn’t expire is to try and get the customer to acknowledge the debt, either directly or indirectly, by calling them nonstop. In other words, if you interact with them and acknowledge the debt, you might be responsible for it again, and they would have a case to try to collect it from you. The following situations may result in a prescription interruption:
- Being outside of South African borders
- Making a contribution toward the debt
- Having legal action taken against you in relation to the debt
To be clear, this does not imply that you should disregard your debt. When you do this, it may result in the seizure of your property or additional legal action, both of which could require you to pay much more than the original debt balance.
Also see: What happens to your debt when you die in Mzansi?