Well, if you didn’t, I don’t blame you.
Most South Africans don’t know their rights with regard to debt.
So what is old debt? The correct financial term for old debt is prescribed debt - and debt is deemed to be prescribed when:
- You have not acknowledged it, either verbally or in writing in the past three years.
- You have not made a promise to pay, or even paid the smallest amount towards this debt within the past three years.
- And when your creditor has not taken legal action against you for this debt within the last three years.
Store and retail accounts, cellphone accounts, credit cards, personal loans, gym memberships and monies owing on vehicle finance are all debts which do "prescribe" after three years.
However, home loans, court-ordered debt (judgments), SARS taxes, traffic fines, TV licences and municipal accounts only prescribe after 30 years.
Please do not view the above information as encouragement to ignore or not pay what you owe.
Paying your debt is the right thing to do, especially if you can afford it.
Maar mense, ek weet almal sukkel!
We can’t even keep up with our current debt payments.
So rather pay what you must on your active debt, instead of spending money to pay old debt, which you technically don’t have to pay anymore.
In 2015, amendments to the National Credit Act made it unlawful for any credit provider or debt collector to sell, or to try and collect payment, on prescribed (old) debt.
Yet, according to Sheperd Silayi, senior debt review manager at National Debt Advisors, this has not stopped debt collectors from calling people from morning till night for payment on a gym contract from 2006 or a credit card from 2012.
Debt collectors are unrelenting in their drive to illegally collect payment on old debt.
“Most debt collectors get commission when they get you to make payment and will often tell you that if you pay just a R20 or a R50 on this old debt, legal action will be stopped. This is a disgusting tactic that consumers should avoid falling prey too,” says Silayi.
“When they get you to acknowledge old debt and you pay even the smallest amount on it, then you revoke your prescription - and that means that you are liable for the entire amount once again.”
It is not your responsibility to prove that you don’t owe the money - the debt collector must prove the debt is not prescribed and that you DO owe the money.
The best thing to do is to tell the debt collector that you don’t acknowledge this debt, as you think it has prescribed.
Then ask the debt collector for a full statement of your account and tell them to show you where you made payment in the last three years, or they must give you proof of legal action taken against you on that account in the last three years.
If they can’t do that, then inform them that you know that your debt is prescribed and tell them to stop harassing you.
If they don’t stop, report them to the Debt Collectors Council. I would further advise you to get an email address and put all your communication in writing.
If your debt has not prescribed and it is still active, do the right thing and pay it if you can afford to do so, or visit a debt counsellor if you cannot afford your monthly debt repayments.
Another point to note is that prescribed debt may NOT reflect on your credit report.
It must be written off by your credit provider and removed from your credit profile.
And just a word of caution mense - we need to stop making debt in order to keep up with the Joneses!
If you can’t afford it, don’t’ buy it.