PRESCRIPTION OF DEBT

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COMMENCEMENT OF THE NATIONAL CREDIT AMENDMENT, 2014 (ACT NO.19 OF 2014) The National Credit Amendment Bill has been adopted by the National Assembly and became effective on 13 March 2015.

126B. (1) (a) No person may sell a debt under a credit agreement to which this Act applies and that has been extinguished by prescription under the Prescription Act, 1969 (Act No. 68 of 1969).     (b) No person may continue the collection of, or re-activate a debt under a credit agreement to which this Act applies—     

(i) which debt has been extinguished by prescription under the Prescription Act, 1969 (Act No. 68 of 1969); and     

(ii) where the consumer raises the defence of prescription, or would reasonably have raised the defence of prescription had the consumer been aware of such a defence, in response to a demand, whether as part of legal proceedings or otherwise.’’.

The insertion refers to debt that has been extinguished by prescription and in terms of the Prescription Act debt is extinguished after a certain period has lapsed. Periods of prescription differ for different types of debt, but for credit agreements it typically lasts for three years.

Prescription can be interrupted by a number of things, such as a tacit or express acknowledgement of a debt and successful judicial action against the debtor. Prescription can only be confirmed after investigation and the provision of the necessary proof that the debt has indeed prescribed or not, which investigation and provision of proof methods and processes are not covered in the new insertion above. The result is that at the end of the day, the courts will make the call as to whether a debt has prescribed or not.

Kindly refer to the Government Gazette #10382_and the following Acts for more detailed information regarding prescription of debts:       

 1. National Credit Act 34 of 2005 - http://www.ncr.org.za/pdfs/NATIONAL_CREDIT_ACT.pdf        

2. Prescription Act 68 of 1969 - http://www.justice.gov.za/legislation/acts/1969-068.pdf