Have you ever received a letter of demand for debt that you cannot even remember? Many years after you are said to have taken out this debt? Maybe you had taken out the debt but you believed it was paid off or you may have lost your job and informed your creditor of this fact and they wrote the debt off as bad debt. Suddenly, out of the blue, you get a letter of demand for it.
Debt prescribes if:
- You have not acknowledged the debt in the past 3 years either verbally or by signing a form
- You have not made any payment towards settling it
- You have not received a summons for it
If the demand relates to a debt that meets the above 3 conditions then it has prescribed and you are not legally bound to pay for it. So you can refuse to pay for it on the grounds that it has prescribed.
Also take note that it is upon the company that claims you owe it to prove that the debt has not prescribed and that you are still bound legally to pay for it.
But why do companies or debt collectors attempt to get a debtor to pay a debt which has prescribed? Legally, there is nothing wrong in a company or debt collector trying to get you to pay for old debt that has prescribed. It is up to you to know your rights!
If you ever receive a letter of demand for a debt that has prescribed, write back and inform the company that you believe the debt has prescribed. At this point, you are likely to be told that only a magistrate can decide whether a debt has prescribed or not. If this happens, give them your current address so that they can summon you to court. Chances are that this will never happen.
If you decide to pay the debt, you have a right to ask for a full statement with details of how the total amount is made up. Look out for excessive debt collection fees that may have been charged. If you believe you are being ripped off, you can report the debt collector to Council for debt collectors on www.debtcolcouncil.co.za
Please send this to the people you care about, especially HR practitioners, I just did.
I opened an account at a furniture shop in 2003 and have being paying till 2005. I lost my job in 2005 and was unemployed for over a year and there was a small balance on this account. I called to enquire about the balance but was told that the debt was written off and that my account was handed over to attorney in 2005 and that a judgement was obtained in the same year. I was never made to sign any documents or received summons or any communication from the attorneys since until this morning (08-12-2010) when someone from the collectors (attorneys) offices called to confirm my employment. The judgement is no longer on my credit report. Is this a prescribed debt.
To answer your question point blank = NO, that is NOT a prescribed debt.
My long answer to your question is as follows :
The debt you’re referring to is probably NOT valid anymore, meaning it’s NOT a debt anymore, as you are also confirming that the judgement is NOT showing on your credit report, however, I think we need to be clear about what “prescribed” means. As the article says at the top, a “prescribed debt” is a debt where
Number 1. You have NOT acknowledged the debt in the past 3 years. To put it more firmly, you have NEVER talked to anyone about the debt (in the past 3 years) saying to them or suggesting to them that you KNOW something about the debt.
Number 2. You have NOT paid a cent to them for that debt (in the past 3 years).
Number 3. You have NOT received a court summons and signed it to confirm that you are aware of legal action being taken against you in court for that debt. You must come to court and appear in court if you have received a summons inviting you to meet someone in court.
Now in your case they had already taken “judgement” against you. It is VERY UNLIKELY that you were NOT aware of the judgment all this time, because they would normally call you to let you know that judgment has been handed down against you on a court matter. But it is possible that you were NOT aware of the court proceedings that took place which are the things that lead to the judgement against you. So you may NOT have been aware that you were “summoned”, but in any case you were probably “summoned”, because I cannot conceive how a judgement would be issued without a copy of the summons being presented before the court by the plaintiff (the person who is complaining against you). What I can say is that perhaps due to the fact that you were NOT duly served with the summons (you did NOT sign to confirm that you received the summons), the judgement they took against you would probably be a “default judgement”, meaning that it’s a judgement taken against you without you appearing in court to defend yourself.
But what if someone calls you now in Dec 2010 or in Jan 2011, asking you to PAY THIS DEBT ? Should you tell them that it’s a prescribed debt ?? . . Well, NO, it is NOT a prescribed debt STILL ! It is a debt that’s got NOTHING to do with prescription right now. In fact, it is NOT a debt anymore !! So if anyone calls you about this debt right now, they would probably be out of their minds, you can go and lay charges of harrassment against them immediately because there is NO money that you owe in terms of this debt right now (in 2011) as we speak.
And what if someone called in November 2008 ? Would you have told them that it’s a prescribed debt .. back then ??
Again, NO . . you could NOT possibly try to tell them that it’s prescribed because they had already obtained judgment against you for the debt (see Number 3 above). You could just tell the person that he has obtained judgment against you, and if he wants any money from you, then he must FIRST abandon/remove the judgment against your name and then he can call you after that to discuss about payment of his money because otherwise it would be useless for you to pay him any money if he wants to hold onto the judgment against you. If debts were the same as crime, then you sitting with a judgment against your name for 5 years . . you are more like someone who has been “convicted” of a crime and you are serving time in jail, yet someone visits you while you’re in jail and says you need to pay him money for the debt that he has already managed to get you convicted of and in jail for. You are paying for the crime by serving time in jail !! Why must you now make a double-payment by again paying this person MONEY for the same crime that you’re paying by serving the time in jail ?? He must get you out of jail FIRST, then you are in a position to talk with him about paying him his money ! I hope you get my point
What if you had NOT talked to anybody on the phone about the debt
You had NOT paid a cent since 2005, and
There was NO judgment against your name or any summonses issued to you that you signed to appear in court ?
And then someone suddenly out of the blue calls you in November 2008 saying he will take legal action against you for failing to pay this debt ???
= That would be a PRESCRIBED DEBT !! Now that’s where you should tell the person to GO AHEAD and TAKE THAT LEGAL ACTION and WHATEVER he is threatening you about. In court, you just position your defense on the grounds that this is a PRESCRIBED DEBT and you’re NOT going to pay for it because the debt has PRESCRIBED !!
Hi Mossie, thank you for the detailed explanation.
One more question to pick you brain.
Say the person cancelled their cell contract with a vendor cos he had lost his job. Then sent a letter to the company stating this and was unable to pay. Then out of the blue in 2011 they call and claim that they are now the Attorneys handling my case and they feel they need to be paid a crazy amount of money. They say that the account only expired in 2009 and therefore it has been handed to them now. How would you respond to these people?
Thank you in advance
I have just received a letter from a debt collecting agency about a debt I had 12 years ago. I was unemployed for nearly 5 years, during which time my wife’s employment sustained us.
How would I know if there is a judgement against my name for this debt. My name is clear with the credit bureaux and I currently have other liabilities, which were approved after checking with the bureaux. I am currently employed and am financially relatively comfortable.
hi
what happens if you get a garnishee order for debt that is over 5 years old? this happened early this year with no previous correspondence. i dont even remember taking out the loan.
i bought a car in 2005. lost my job a month later. FNB started harrassing me the next two months and siting that they were told in my job that i do not work there anymore while i still in ccma with my employer. they got involved in work issues that did not need them. in September 2005 they went to my home address when I was not thre they went to my primary schools teacher , priest looking for a criminal. The last person to call me in 2006 exctually said they have a buyer and I must bring the car. they did not want to negotiate payment plans. He even at the end of the call said he cannot take this from a “kaffir”. When I called FNB and requested them to give me name of the person they refused and never called me since.
Last week now when we get home a copy of summons obtained in 10 October 2011 have been dropped at my hose by a new company registered in 2011.
What do i do in this event? Do i give back the asset and what happens to the debt?
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