Debt and the defence of prescription clarified

The collection of prescribed debt is prohibited. No person may sell a debt under a credit agreement that has been extinguished by prescription under the Prescription Act 68 of 1969. Further, no person may continue the collection of, or re-activate a debt under a credit agreement where the debt has been extinguished by prescription or where the consumer could have raised the defence of prescription had the consumer been aware of such a defence.

The above prohibitions were incorporated into the National Credit Act 34 of 2005 by the National Credit Amendment Act 19 of 2014 and are now entrenched in section 126B. The National Credit Amendment Act 19 of 2014 was assented to on the 16th of May 2014 and came into effect on the 13th of March 2015.

Albeit that the sale, collection and re-activation of prescription is now prohibited, many debt collectors continue to buy debt books that include prescribed accounts and some debt collectors continue to harass consumers for prescribed accounts and in some instances, judgments are even granted in respect of prescribed accounts as the defence of prescription and/or issue of prescription was not placed before the Court at the time the judgment was granted.

There is even evidence of companies listed on the JSE, who part-take in these unlawful practices. One such company is on record as saying that it does not collect on prescribed debt, although it admits that mistakes can happen. The number of such incidents need to be examined to test the mettle of this explanation.
Thus, where demands for payment are made to consumers, consumers must be prudent enough to determine the lawfulness of the creditors’ demands for payment. Threatening letters of legal action being taken against the consumer are par for the course. The tone and letter of these letters smack of intimidation and consumers, being unaware of their rights, cave in under the pressure. When challenged, some debt collectors will go as far as saying the prescription was broken when the consumer made payment toward the account. Remember, this is not correct. To “break” or interrupt prescription is essentially unlawful in terms of Section 126B of the National Credit Act 34 of 2005.