The Ombudsman for Banking Services (OBS) has issued a communication that alerts consumers to their rights when it comes to debt that has prescribed.
According to ombudsman Reana Steyn, most consumers are ignorant that creditors are prohibited from collecting prescribed debts that fall under the National Credit Act (NCA).
The Prescription Act, read with section 126B of the NCA, states that a debtor’s liability to pay a specific debt to a creditor is extinguished as a result of the passing of a prescribed period.
The Prescription Act stipulates the period after which a consumer’s obligation to pay a monetary debt to a creditor will be extinguished and the instances in which this period will be delayed or interrupted.
“The Prescription Act is clear. Generally, contractual and civil debts will be extinguished if not paid or acknowledged as being owed to the creditor by the debtor for a period of three years from the date when the payment was due,” Steyn said.
There are exceptions, where the prescription period for certain contractual and civil debts is longer. For example, a bank’s claim for the repayment of a monetary debt based on a court judgment, as well as claims for debts secured by mortgage bonds, prescribe after 30 years and not three years, Steyn said.
Is it legal for creditors to collect a prescribed debt?
Steyn said the answer to this question depends on whether the debt falls within the ambit of the NCA. In other words, whether the debt relates to a credit agreement and falls within the definition of a credit agreement in the NCA. Examples are overdraft facilities, mortgage loans, personal loans or credit card debt and vehicle finance agreements.
The protections afforded to consumers by the NCA do not apply to all agreements, and as such, it is legal for creditors to demand payment or call consumers to get them to acknowledge a prescribed debt and even sue on a prescribed debt, for agreements falling outside the NCA.
“It is important for consumers to be aware of the fact that once they have acknowledged owing the debt, even if they have not made payment, they will not be able to successfully raise the defence of prescription in court should they be sued by creditors on prescribed debts,” Steyn said.
Under the protection afforded to consumers by the NCA, banks and other creditors are prohibited from collecting or selling a debt that has prescribed.
“Therefore, debtors no longer have to be aware of this law, and they do not have to raise the defence of prescription in order to be absolved from paying these debts and to have their credit bureau profiles updated to reflect the correct state of affairs,” Steyn said.
When is prescription interrupted?
According to the Prescription Act, the running of prescription is interrupted if, during the three years after the payment was due, one of the following happened:
- The debtor admitted, verbally or in writing, to owing the debt;
- The debtor made a payment towards the debt; or
- The creditor issued and served a summons on the debtor.
“If you are a bank customer and none of the above happened, and you receive a letter of demand from the bank or its lawyers for payment of a debt you believe has prescribed in law, you should raise prescription. If they continue to demand payment or take any other steps to collect the debt, you should log a complaint with the OBS,” Steyn said.
Most cases decided in favour of the banks
Steyn said that, between January 2021 and July 2022, the OBS received and investigated 193 complaints relating to allegations of collections on prescribed debts by banks. More than R1 million was written off or repaid to complainants.
A total of 118 complaints were received in 2021. In about 33% of these cases, the OBS found that the banks in question were unlawfully collecting or attempting to collect on prescribed debts.
This year, the OBS has to date received 75 of these matters. In 29% of these cases, the banks have been found to have transgressed the Prescription Act and the NCA.
She said that in a recent case, R216 197 (the outstanding balance) was written off, and the complainant was also refunded the R3 200 that he paid towards the prescribed debt.
Steyn drew attention to the fact that, in most cases, the OBS found in favour of the banks.
The debts in matters where the OBS found in favour of the banks had not prescribed, and the outstanding balances had drastically increased from the original debt or balance because of the arrears, as well as the legal fees where the banks instituted legal action to recover the amounts legitimately owed to them.
Good day Madam.
I received a call from an attorney firm on 03 December 2022 that I have an outstanding debt of R11,000,00 still on record at a furniture store after an elapse of 5 years and 7 months without having any written or verbal contact with them, or any other party, since May 2017.
Now, out of the blue, I received a call from a lawyer’s firm threatening me with legal action, blacklisting, etc.
The debt were made in December 2016 and I did made payments towards the account till April 2017 when some of the electrical household items that I’ve bought started to fuse their elements, etc.
I have contacted the furniture store to report the matter due to the fact that the items were still under quarantee. They made promises to come and collect the default articles for repair, which never realized. I then stopped my payments, as well as to contact them again. I did get two or three calls from them for arreared payments during May and June 2017, which I ignored.
I never received any further verbal calls, or written correspondence, from then afterwards, until Friday 03 December 2022.
May I, regarding this matter, invoke myself to the statute of limitations. In this case yearing of the debt?
Kind regards.
Lourens.
Good day
Based on the information you have provided, it seems you can raise the defence of prescription. You may want to take your complaint to the Ombudsman for Banking Services: https://www.obssa.co.za/
Good day
I had direct axis loan in 2016, unfortunately I lost my job and couldn’t pay it anymore
The debt was prescribed now when I check my credit profile a see a name Nimble there I don’t know who those people are
Googled I found out they bought direct axis loan
Kindly advise how to go about this because the debt was not supposed to have been bought as it is prescribed.
Good day
I suggest you lodge a complaint with the Credit Ombud: https://www.creditombud.org.za/
I was forced to pay arrears amounting to close to R10 000.00 in license fees for a motor vehicle I sold 10 yers prior. I never knew that the purchaser never changed ownership despite having received and signed the transfer papers. Am I allowed to recover the amount using the Small Claims Court process? Will prescription in this case apply? I want the amount I was forced to pay refunded to me. Regards
Essentially, if there has been no attempt to recover the debt for three years or no acknowledgement of the debt for three years, prescription applies. If the licence fees were paid to a municipality, you cannot approach the Small Claims Court because state entities are excluded from its jurisdiction.
I disagree. prescription of debt owed to the State (which includes municipalities) is 30 years.; not 3.
My debt is over 7 year and no one has called for payment …but now on the credit score it says it interupted prescription…have not called them no contact between .myself and debt..
Please advise
Please contact the National Credit Regulator and lodge a complaint: https://www.ncr.org.za/
Hi I had a standard bank credit card 18 years ago I lost my job and I was unable to pay it. I recently tried to apply for home and standard bank says I owe. I don’t understand after so many years no one called and requested a payment. Please advice.
i have more than five years of unemployment and i never paid any debt, i believe all my debt are prescribed and the bank lawyers forced me to pay because they blacklisted me, they prescribed the same credit card account but refused to prescribe the loan,
How can you prescribe a credit card but not the account itself?
Good day,
My 67yr mom approached legal aid Sa for assistance in getting a money from a debtor who stopped paying the monthly installments.
We consulted with an Attorney in September 2021.and several emails and telephonic messages for an update on the matter were ignored. December 3months later the attorney replied requesting a consult for January 2022. And still he had done nothing.
January 2022 we informed him that he has moved to the Cape and we only had the debtors work address. Numerous emails requesting for an update as the matter would prescribed in April were ignored
Finally a letter of demand was sent in June . A complaint to Legal Aid head office am Advocate called and we had another consul .
Question as to why a letter of demand was sent after prescription hasn’t been answered. And the file has been closed as they claim they only received the address in June 2022. I have all the emails correspondence from 2021 that is prima facie evidence of damages and shows malpractice and misconduct. Any advice would be appreciated
Good day,
My husband was retrenched more than 5 years ago. He had a HP agreement with Wesbank. The bank repossessed the vehicle due to non payment as he could not afford it. The debt became prescribed. There is no problem on ITC , but he applied for a Home loan with FNB and they picked the old account number with Wesbank and requested a settlement letter for this debt.
Wesbank said they receovered what they could and the debt has prescribed and they cannot claim any monies from him. But FNB are now questioning this. Is FNB allowed to hold this against him ito a bond application ?
Hi my is innocent khumalo I have 5 accounts open in 2015 and 2016 and 3 of them are prescription interrupted and I want to know that I am I liggable to pay all of them ?
In March 2017 I had taken out a vehicle finance with Wesbank. I soon after was unemployed, The vehicle in question was not in my possession at the time and I instructed Wesbank to collect the vehicle. A Mr Danie Van de berg was dealing with the case from 2018 and I last had contact with him in 15 January 2019. I had given him all the details I knew regarding the address and contact details of the person who had the car in their possession, and they informed me that they would uplift it.
I have made no payments on this account from 2018 to current. I have not been issued with any legal actions (summons or judgements) in the time frame. I did not confirm the debt in this period due to me being under the impression that it was collected. My last correspondence with regards to the matter was in 2019.
In June 2023 – 6 years later – I received a call from Mrs. Keys from NRB Risk solutions, threatening to raise a judgement against me and that I need to pay the account. I was startled because according to my knowledge the car was being uplifted in 2019.
I sent written correspondence requesting proof that the debt has not been prescribed and she refused to provide me with such proof. She insists that they will continue contacting me regarding this old debt.
Is it possible to raise a judgement 3 or more years after default on an account? And is it possible to Collect this after such a long time frame ?
I suggest your best option in this matter is to lodge a complaint with Ombudsman for Banking Services: https://www.obssa.co.za/
I did. I have a temporary reference number for now. The lady from NRB risk is still contacting me and said and I quote : “ we will not STOP”
good morning
i got a prescription problem with DMC it was two accounts which precribe period , which truworths re opened the account which today iam buying on both my accounts, today dmc saod ony one account have precribe now this is my dilema , the truworths group have approved oth account as and i have payed 6 paymets , dmc relisted me aganain, i have sent them several letters and they are ignorant my request
i hope you can advice me on this matter
regards
gregory nyongane
email gregorynyongane@gmail.co
cel 0711469847
If DMC won’t respond, you should complain to the Credit Ombud.
Qustion : I have applied for prescribtion on accounts which was not paid for 3 years and a cou[le of months. these accounts has been sold to debt collectors . Now all of sudden after I ask for prescribtion letters they want to take leagal action against me.
The prescribtion act states has been ammanded in 2020 I think which make it illigal or debt collectors to demand payment for prescribed debt. What is my next option . I have written to NCR. The credit OB advised that I should contact the BAnkob. they have send me the application with terms. Whom can I contact?
I too received a listing from Debt Management (Pty) Ltd (the infamous DMC) on an Edgar’s account which was settled years ago. DMC never contacted me nor was I informed about the intent to list me. Funny enough on Edgar’s system the account was settled!!!!!!!! I was truly shocked at DMC’s attitude and professionalism. The first call center agent simply ended the call when he couldn’t answer my questions. They seem to be operating as a criminal syndicate that is trying to extort funds from the public. I would really appreciate any advice or assistance in dealing with these criminals!
The Credit Ombud resolves complaints from consumers and businesses that are negatively impacted by credit bureau information or when a consumer has a dispute with a credit provider. https://www.creditombud.org.za/
I have the same issue. Accounts prescribed 2022, went under debt review in 2023 and DMC snuck the prescribed accounts onto my debt review, Finfix is refusing to help me get it removed but they are the ones who accepted prescribed accounts without my permission. Now DMC is claiming to have spoken to my husband on the phone about the accounts in 2021 which never happened and they are unable to provide proof. DMC is criminals and that company should be closed down
I also went under debt review with Finfix, they did exactly the same thing to me.cancelled them after 4 months,as I was paying them almost R3000 month and not making ends meet. 3 years later with most of my debt paid up by myself. Debt review flag stayed on my profile
I’m praying now for prescription to the rest of my accounts
Not sure if they’ll prescribe while under debt review
Good day,
My debt has expired with Absa Vehicle Finance.
We financed a vehicle in 2014, and went under debt review in 2017, then we had Covid19. We have paid and missed some payments. The agreement was set to expire 72 months later. We are now 10 years later and the tracers are calling making threats to repossess, they say they have a warrant. We have not been served with a court document to date. We will consider voluntarily handing over the vehicle, as the bank will not accept any payment arrangements. Furthermore, the bank are charging compounded interest and the principal amount has exceeded the vehicle value and contractual agreement amount.
Any advice would be appreciated.
Thank you
Good day
Moonstone cannot provide individuals with legal advice. Among other things, we do not have sight of all the particulars and documentation from both parties. Therefore, we would prefer not to provide advice that may not be correct. It is best to seek assistance from the Ombudsman for Banking Services: https://www.obssa.co.za/
Hi I Am Gabriel, I had a TFG account which i was paying well until 2017, i got a vehicle finance which later i was moved to work far from where i used to stay and i couldnt afford to pay, i only made sure i pay the car to make sure it doesnt get repossessed, last year i felt it was hard, i requested a consolidation of accounts, then i was put under debt review, now i realised in the debt review there’s an account which says i owe over R14000.00 and and my initial debt when i couldnt pay was below R3000.00, i tried to call them when i got retrenched to wana settle the account but they said i cant, i need to talk to my debt counsellor, i tried to ask all the statements to show me how the money accumulated from 3000 to 14000, i get no response, im worried that it has been over 5years now they tell me about the debt reactivated and i didn’t know because it went through the debt counseling when i quiry the statements im not given.
I had a personal loan with a company in 2016 and after paying them monthly every month I lost my job and kinda forgot about the loan that I had. Since then they have not contacted me via telephone or email until now. I went and got a credit report and saw that the information was still open and then made contact with the creditor to ask for a prescribed letter and they then refused to provide me with one.
They then told me that they made contact and sent a summons twice and I have never received anything from them. I then proceeded to ask for proof of contact and who the sheriff was that they sent out with the summons and they refuse to give me any form of proof of contact or information on the sheriff they allegedly sent out for collection.
I am at a loss as I need this information removed from my name and yet the creditor is refusing to go by the rules of the NCA and the Prescription Act.
I had a personal loan with Nedbank in 2016 and after paying them monthly every month I lost my job had. Since then, they have not contacted me via telephone or email until now.
Today in the morning I received a call they say they colleting on behalf of Nedbank. I said that account supposed to be prescribed she dropped the call.
Hi I’m currently divorced for eight (8) and I was under Dept review because we were married in Community of Property COP, now my issue is the Company One Dept Review refuses to give me a settlement letter they say they want the ex-husband to contact them not I since he is a member. I cannot get any assistance from the ex-husband since he refused to assist me. How can I get assistance from the Ombudsman. Thank you kindly
I had a credit card with Standard bank and they sold it to MBD and now MBD doesn’t want to resolve this matter
Good Day,
I took out an RCP with Standard Bank for an amount of R142000 in 2012.
The term was supposed to be 5 years but 11 years later and I am still paying.
Standard bank miscalculated the debit amount and ended up being debited less than what I was supposed to.
When they picked this up, I was not financially in position to pay the actual amount required.
We agreed on an amount 2 years ago which will then take 152 months to pay from that point on considering no interest rate change.
In view of the current interest rate hikes, this has not brought down my balance at all and I am concerned that I am just going to pay and pay with no end in sight.
Please advise on my rights around this as I really feel helpless in this situation.
Thanks,
Ronnell
Good day
It appears that you have grounds to lodge a complaint against Standard Bank with the National Credit Regulator: https://www.ncr.org.za/index.php/departments/complaints
Good day, my debt prescribed and without me understanding fully ,i acknowledge debt and have not paid in 4 years i just want to confirm if my debt has prescribed and what matters should i take to clear my name if possible.
Thank you
Good day
So i have this Problem i have prescribed debt for a car that i gave back in march 2020 in covid, in april may and june NRB risk solutions phone and emailed me saying that they going to take further legal action if i dont pay them so i was scared and paid them in August. I was never aware of the Prescription act my Debt prescribed in march and now this is where i am what do i do im stressed out about this i still ow them R72000.00 apperently
Good day
So i have this Problem i have prescribed debt for a car that i gave back in march 2020 in covid, in april may and june 2023 NRB risk solutions phone and emailed me saying that they going to take further legal action if i dont pay them so i was scared and paid them in August. I was never aware of the Prescription act and my Debt prescribed in march 2023 and now this is where i am what do i do im stressed out about this i still owe them R72000.00 apparently
Good day
So i have this Problem i have prescribed debt for a car that i gave back to Wesbank in march 2020 in covid, in april may and june 2023 NRB risk solutions phoned and emailed me saying that my Wesbank account was sold to them and they going to take further legal action if i dont pay them so i was scared and paid them in August 2023. I was never aware of the Prescription act my Debt prescribed in march and now this is where i am what do i do im stressed out about this i still owe them R72000.00 apparently
Have 4 accounts opened in may 2020 and last paymsnt i made was september 2020 due to cost of living and affordability. Can this debt be seen as prescribed and should be removed from my itc. Its not listed as a default or judgement but shows on my profile with arrears.
Good day. I have been unemployed since 2012. I had a standard bank personal loan and a direct access personal loan. They both handed me over to the lawyer. I made arrangements to pay a monthly installment on each of them . Now it’s 2023 and I owe more than double on each one. What can I do as I’m still unemployed and can’t afford to make payments. Please advise. I’m desperate.
I suggest you approach a debt counsellor who can draw up a repayment plan for your creditors.
Can a lawyer after 8 years of no contact at all suddenly demand payment of a bill that he forgot anout
The Prescription Act is clear. Generally, contractual and civil debts will be extinguished if not paid or acknowledged as being owed to the creditor by the debtor for a period of three years from the date when the payment was due.
Hi, how can I best deal with a comany called DMC? On my credit report it is showing up with an account opened in January 2017, but no communication in letter, e-mail, or phone call has been made to me till now in 2023. How can I get them off my credit report and credit score becasue it is the only hanging debt and is giving me bad credit score?
Is a bank allowed to hand over the same home loan and personal loan account to three attorney firms for collection?
Hi,
Please would you give me some advice.
I had a vehicle with Wesbank that was repossessed this was well over 10 years ago. I got blacklisted afterwards as I wasn’t able to make the payments which stayed on my name for 5 years. After 5 years I put in a dispute for the blacklisting and the credit bureau removed it from my name as I understand after 5 years they need to take that blacklisting off. That’s was about 3 maybe 4 years ago when they took off the blacklisting. I haven’t heard anything since they removed the blacklisting from my name. Now out the blue I get some attorney firm calling and messaging me telling me they are taking legal action on this Wesbank account. This account was closed and written off well over 3 to 4 years ago. The vehicle itself was taken back over 10 years ago and the blacklisting that i got back then had past it’s 5 year mark and was withdrawen. Can these attorneys so many years later bring back this debt?
My name is Esther I had a finance from wesbnk in 2016 and they repposesse the car in 2019 without any written warning and they took the bus without any proper document..now 5years later lawyers demand money I told them I am now not working as I am depending only on dissability grant..they then said I should pay 500 per month..any advise.Thanks
My account is currently with DMC5 an is 10 years old. I lost my job and couldn’t afford the payments. The above mentioned company refuses to clear my name and this is affecting me getting a job. Please help
Default is prescribed for 1 year. Does it mean a credit provider can re-list unpaid default every year?
Hi there, i went under administration in 2006, i had to pay 1000 rand a month according to the court order. The administration company lied and said this will take 3 years and they get a once off payment of 3000 rand. I had a garnishee order on my salary. 2013 they stopped deducting because i paid maxlaw to get me off administration. Everything was fine until October 2023 i see on my payslip a garnish order for 1000 rand a month and its still the original amount owing. I went to the lawyers jr besters. They told me administration doesnt qualify as prescribed debt. Is this true. After 10 years of no contact they just garnishee me. Is this legal? Any help would be appreciated. Thank you.
Good day, my wife applied for a loan on the 22nd of January 2023. This was with an institution that she had a loan before and had successfully paid back in full, with no payments missed or late payments. My wife has an impeccable credit record. On the 23rd we received an email that the loan was approved and we just need to approve the Debi mandate with our bank. We never received the message from the bank. We made a lot of calls to the Lender and for a week long, received a complete run-around. We escalated the matter to the Complaints dept and then were told that it looks like the email we received was a scam. The interesting part was that we received the same email on the 28th. Every time there is a link that takes us straight to the Lender’s website. Three times we had to accept their quote, which we did and every time the process stops with the verification message from the bank.
Interesting part is that the Lender is part of our bank. We were driving to the bank nearly every second day. On the banking app, the Debi Mandate shows as rejected, yet we never received the prompt to accept.
This has placed us under immense financial month pressure and my wife is an emotional wreck. I had to approach friends and other parties to lend money, just to ensure that my wife’s debit orders do not bounce.
We have written confirmation of the loan being accepted and a lady Bulelwa from the Customer Care Dept had stated on the phone that the loan is approved and the contract is signed, just need the debit mandate confirmation. On the 25th she also informed my wife that the loan will paid out same day!
What can we do with a situation like this, because as a direct result of the Lender’s incompetence and horrible service, we are in a total financial mess.
Thank you
Good day
The situation in which you and your wife find yourselves is most distressing. Pursuing this matter further with the institution appears would appear to be a waste of time. Since the lender is part of your bank, I suggest you file a complaint with the Ombudsman for Banking Services: https://www.obssa.co.za/resolving-complaints/
Alternatively, you could complain to the Credit Ombud: https://www.creditombud.org.za/
I went under debt review in 2021,cancelled them 4 months later and since then haven’t paid any of my debts since 2021. This year will be 3 years
Will they prescribe or am I still liable for them under debt review
And if they prescribe, can I request a clearance certificate from the debt councillor as prescription