Prescribed debt: A complete guide
Prescribed debt is an interesting scenario that people who utilise credit across South Africa should know more about. It’s not common, but if caught off guard, you could be responsible for a debt you don’t need to pay.
Read: 10 Warning signs that you have a debt problem
What is prescribed debt?
Prescribed debt is a form of protection for ‘old debt’ that has passed the 3-year mark without being paid or acknowledged. The period may change depending on the type of credit. The main aspect of this type of debt is that the debtor acknowledges it to be valid. If you admit to the debt or attempt to pay it off, the prescribed debt coverage falls away.
If the creditor attempts to communicate with you, demands payments or takes legal action to gain compensation, the debt no longer falls under the protection of being prescribed.
Want to know more? Let’s answer a few of the most popular questions about prescribed debt.
What doesn’t count as prescribed debt?
- Home loans do not fall under prescribed debt, and all fees are payable. If you fail to pay your mortgage loan payments, foreclosure is possible.
- Municipal debt, such as bonds and accounts, isn’t removed through prescribed debt. This includes electricity accounts, tariffs, and taxes.
- If you own a TV, you need a television license. Not paying your TV license will incur extra fees and costs, and this debt doesn’t qualify as prescribed debt.
- Failing to pay your taxes means you’ll receive fines, interest, and fees on your SARS account. This form of debt doesn’t qualify as prescribed debt.
How can I get rid of prescribed debt in South Africa?
If you want to have prescribed debt removed from your record, you will need to contact the credit provider directly. Request to have the debt removed from your credit profile and then contact credit bureaus such as TransUnion and Experian.
The credit bureaus will open an investigation. If your debt meets the criteria and has surpassed the 3-year mark (or the appropriate time for your type of debt), removal from your credit profile is almost immediate.
When is debt no longer prescribed?
Several factors can cause prescribed debt to be void. Here are a few of the scenarios that would cause prescribed debt to be fully payable by you.
- You acknowledge that the debt exists.
- You attempt to make a payment to clear the debt
- If the creditor takes legal action against you
- You do not reside in South Africa
- You change your contact details and don’t update them
- You married the credit provider
- Your business partner is the credit provider
Can credit providers collect on a prescribed debt?
No. According to the National Credit Act (amended in March 2015), it is illegal for creditors to attempt to claim the debt that is prescribed and has expired. If the debt has already been removed from your credit profile, you can refuse to make any payment.
If you have more questions or need help getting a handle on your debt, contact Debtline for more information. Let us help you take control of your finances and live debt free.
