Consumers can now be absolved of debt older than three years (with a few conditions), this after the new National Credit Act was passed last year.
According to James O’Haughey CFO of Intelligent Debt Management Group, civil summonses and judgments for debt have dropped tremendously.
"The National Credit Regulator has been quite active in the industry".
Figures recently released by Stats SA showed that the total number of civil summonses issued for debt decreased by 13.4 percent in the first quarter of 2016 compared with the first quarter of 2015.
However, the largest contributions to the 13.4 percent drop were civil summonses relating to money lent (contributing -7.6 percentage points); ‘other’ debts (contributing -3.1 percentage points); and services (contributing -1.3 percentage points).
The total number of civil judgments recorded for debt fell by 11.2 percent and the total value of the judgments slipped by 5.8 percent.
O’Haughey said he expect these figures to continue to fall as the selling and the collection of prescribed debts resulting from credit agreements are prohibited by The National Credit Act.
Here’s what you need to know about prescribed debt
Prescribed debt according to the Prescription Act 68 of 1969, section 10 (1), is when:
· You have not acknowledged the debt for three consecutive years either in writing or verbally
· No payment or promises towards the outstanding amounts were made
· You have not been summonsed or this debt by the creditor within three consecutive years
However, debts such as clothing accounts, cell phones, and credit card debt, usually prescribe after three years if there has been no payment or acknowledgement of it and no summons issued, then the consumer is not obliged to pay the debt.
On the contrary, most consumers who are unaware of the prescription act opt to settle scores, however, when they do learn about the prescription it may be too late due to payments being made.
Keep in mind that not all debt prescribes in three years there is debt that prescribes after 30 years, such as mortgage, municipal accounts, TV licence and monies owed to SARS
In terms of the new National Credit Amendment Act, it is also illegal for a company to contact a consumer and demand that they pay a prescribed debt.
Should you get a call or SMS about this debt, point that out, and then say: “That debt has prescribed. Please don’t contact me again.”
Keep in mind that it is also illegal for employers and employment agencies to ask job applicants for their permission to view their credit records - unless the advertised position involves the handling of cash or finance.
As for checking your credit record, you are legally entitled to one free credit report a year.