If you are being chased for an old debt which you just cannot pay, consider whether it may have “prescribed” – if so, the debt is extinguished and you cannot be forced to pay.
Most debts prescribe after 3 years (up to 30 years for some debts such as judgments, tax debts and mortgage bonds) unless interrupted in some way – usually if you acknowledge liability for the debt or make a payment against it, or if summons is served on you.
Critically however, until now it has been up to you to raise the defence of prescription – there has been nothing stopping your creditor (or a debt collector to whom your debt has been sold) from chasing you for prescribed debt and hoping that you don’t know enough about the law of prescription to raise the defence.
Now an amendment to the NCA (National Credit Act) specifically prohibits anyone from selling, continuing the collection of, or re-activating any prescribed debt to which the NCA applies (it applies to most common credit agreements – take advice if you aren’t sure whether you are covered).
In other words, where the NCA applies, your prescribed debt can neither be sold to a debt collector, nor enforced by either the creditor or the debt collector.
Creditors: Don’t delay!
Of course this new law serves as a reminder to all creditors (and debt collectors) to take enforcement action against debtors without delay. In particular don’t leave issuing summons until the last minute – you have to actually serve the summons on the debtor before the 3 year period expires.
