What happens when a debt prescribes?

When a debt prescribes, it stops being legally enforceable. The money is not magically repaid, but the creditor loses the right to force you to pay it. They cannot get judgment against you, they cannot attach your salary and they cannot lawfully keep chasing you for it.

Prescription is governed by the Prescription Act 68 of 1969. For most ordinary debt, including credit cards, store accounts, personal loans, vehicle finance, overdrafts and unpaid municipal accounts, the period is three years. Some debts run for 30 years, including mortgage bonds, judgment debts and certain debts owed to the state.

When the three years starts running

The clock starts on the date the debt becomes due, which is usually the date you should have paid and did not. In practice, for a credit agreement, that is normally the date of the last payment you made or the date the account first fell into default, whichever is later.

The three years then runs continuously unless something interrupts or delays it.

What stops the clock

Two things interrupt prescription and start the three years again from zero.

Acknowledgement of the debt. If you admit that you owe the money, prescription restarts. This does not need to be formal. Making a small payment, signing an acknowledgement of debt, agreeing to a payment arrangement, or even an email saying you will settle when you can, will usually count. This is the most common reason people who thought their debt had prescribed find that it has not.

Service of summons. If the creditor issues a summons and it is properly served on you, prescription is interrupted while the case runs. If they get judgment, the debt becomes a judgment debt, which prescribes only after 30 years.

Prescription can also be delayed in certain circumstances, for example while the debtor is outside the country or while the creditor is legally prevented from suing.

What a prescribed debt means for you in practice

Three things follow once a debt has genuinely prescribed.

1. You cannot be sued successfully for it. If a creditor issues summons on a prescribed debt, prescription is a complete defence. You have to raise it though. The Prescription Act does not allow a court to take notice of prescription on its own, so if you ignore the summons and default judgment is granted, the judgment stands even though the underlying debt had prescribed.
2. Collectors may not chase you for it. The National Credit Act was amended so that a credit provider or debt collector may not collect on a prescribed debt where the consumer raises prescription, and may not sell a prescribed debt on to someone else. This closed the market in old prescribed "zombie" debt books.
3. It should not sit on your credit record forever. Credit bureaus have maximum retention periods for adverse information set by the National Credit Act regulations. Old defaults fall away over time, and a listing that is wrong or outdated can be disputed for free.

What to do if you are chased for a prescribed debt

1. Work out the date of your last payment or last written acknowledgement. Bank statements are the best evidence. Our prescription checker will help you work out the likely position.
2. Do not pay anything, not even a small amount, and do not sign an acknowledgement of debt, until you are sure of the dates. A single payment can revive the whole debt.
3. Write to the collector, by email so you have a record, stating that you raise prescription and asking them to stop collection and confirm in writing.
4. Check your credit report at each credit bureau. If the listing is wrong or out of date, dispute it. Our guide on disputing a listing sets out the free process.
5. If they keep calling, complain to the National Credit Regulator on 0860 627 627, or to the Credit Ombud, which now forms part of the National Financial Ombud Scheme South Africa. Registered debt collectors also answer to the Council for Debt Collectors.

Where people get this wrong

The most common mistake is treating the three years as running from the date the account was opened, or from the date the creditor last contacted you. Neither is right. What matters is when the debt became due and when you last acknowledged it.

The second mistake is assuming that because the last payment was more than three years ago, prescription is guaranteed. If summons was served on you at some point, even at an old address you no longer use, the clock may have been interrupted long ago and a judgment may already exist. It is worth checking your credit record for judgments before you rely on prescription.

The third mistake is confusing prescription with the debt being written off. A prescribed debt is unenforceable, not paid. If you voluntarily pay it, you cannot get the money back.

Prescription and a debt already under debt review

If a debt is included in a debt review repayment plan, you are paying it, which means you are acknowledging it. Prescription is not running on those accounts. Prescription is only relevant for old debts you have stopped paying entirely and have not acknowledged.

If the amount at stake is small, remember the Small Claims Court handles claims up to R20 000 without an attorney, and Legal Aid South Africa can be reached on 0800 110 110 to check whether you qualify for help.