[Question] Debt - How long to collect?

[Taxempt]

How long does a company have to collect debt, ie; can they collect on debt that is 10 years old? I need legal referance if possible
Thx

[BusFact]

I believe debt prescribes after 3 years. So you have that time in which to get a judgement or an admission of debt.

This does not apply to the Government. Sorry, can't give any legal references.

[Dave A]

I'm hoping a lawyer will give the definitive answer on this, but I don't think it's as simple as three years to judgement or AOD. In layman's terms, my understanding would be dormant for three years - ie no progressive step towards realisation.

Once a step towards collection has been made, the clock starts ticking from zero again.

In hunting around for something more definitive, I happened to trip over this. When it comes to organs of state, you have to deliver notice of intention to commence legal action within 6 months of the debt becoming due, otherwise the debt expires

It seems this early escape route from debt doesn't extend to the rest of us, though.

[sterne.law@gmail.com]

Prescription is the time period in which a claim or action must be brought. It is not the TOTAL time allowed in which to complete the action.
Hence as Dave says, you have a time period in which to file the first papers. You can apply for condonation, once the time period has expired, but 10 years may be ambitious.

The relevant act is The Prescription Act 68 of 1969
CHAPTER III
PRESCRIPTION OF DEBTS (ss 10-16)
(1) Subject to the provisions of this Chapter and of Chapter IV, a debt shall be extinguished by prescription after
the lapse of the period which in terms of the relevant law applies in respect of the prescription of such debt.
(2) By the prescription of a principal debt a subsidiary debt which arose from such principal debt shall also be
(3) Notwithstanding the provisions of subsections (1) and (2), payment by the debtor of a debt after it has been
extinguished by prescription in terms of either of the said subsections, shall be regarded as payment of a debt.

The periods of prescription of debts shall be the following:
(a) thirty years in respect of-

(i) any debt secured by mortgage bond;
(ii) any judgment debt;
(iii) any debt in respect of any taxation imposed or levied by or under any law;
(iv) any debt owed to the State in respect of any share of the profits, royalties or
any similar consideration payable in respect of the right to mine minerals or
other substances;

(b) fifteen years in respect of any debt owed to the State and arising out of an advance
or loan of money or a sale or lease of land by the State to the debtor, unless a
longer period applies in respect of the debt in question in terms of paragraph (a);
(c) six years in respect of a debt arising from a bill of exchange or other negotiable
instrument or from a notarial contract, unless a longer period applies in respect of
the debt in question in terms of paragraph (a) or (b);
(d) save where an Act of Parliament provides otherwise, three years in respect of any
other debt

(1) Subject to the provisions of subsections (2) and (3), prescription shall commence to run as soon as the debt is due
(2) If the debtor wilfully prevents the creditor from coming to know of the existence of the debt, prescription shall
not commence to run until the creditor becomes aware of the existence of the debt.
(3) A debt shall not be deemed to be due until the creditor has knowledge of the identity of the debtor and of the
facts from which the debt arises: Provided that a creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable care.


There are certain actions which would delay or postpone or alter the time period calculation.

[garthu]

Ok so my understanding then is if i attempt to claim a debt today by sending a statement and notice then the clock starts to 3 years, then if i resend a statement in 1 year with a notice the clock starts from zero again??? IS that correct???

[sterne.law@gmail.com]

No. The cause of the action, that being when the debt became due or rather overdue, is when the clock starts. If there is an acknowledgment of the debt, the clock would start again. (A possible back door in)
If it was possible to keep restarting the clock by giving a statement then prescription would be non existent.
Depending how much money is at stake, you may want to write this debt off as school fees.
If you bought the business and the debt was not known to you(ie not on books) then you may have a back door.

[IanF]

What happens when the debtor pays something does the clock start again, or even acknowledges that they owe the money.

[sterne.law@gmail.com]

If there is acknowledgment of the debt, and payment is a form of tacit acknowledgment, then thats when the clock is restarted.

A common tactic or possible solution is to draw up an acknowledgment of debt with very good terms. The person is either aware of prescription or not, so the offer of an AOD instead of legal action and costs is often accepted. Now the doors open and you can charge through. Of course if the OAD is signed then you cannot proceed for summons until the AOD terms are broken.

On an aside, an AOD can be made an order of the court, which shortcuts the time and costs of the summons route.

[ruth]

How long?

How long?

I am just trying to understand this correctly.
I had a bank call me, telling me that I owe them money for a credit card. they said I opened the account in 1998. I don't remember having a credit card with that bank. Besides that, i have not had any dealings with that bank for 10 years. So lets say I did have a credit card. Can they now, ten years later, after having no contact with them, from them, can they tell me I owe them money and I need to pay them?

[Windsor]

How long for Student loan before lapse?

I have a similar question.

My wife made a student loan for R10000.00 about 6 and a half years ago. She has since completed her studies. Since starting the loan she never heard from the institution during the entire period, until last year October - 6 1/2 years later.

Her mother wrote a letter enquiring about the fact that the letter requesting payment only came 6 1/2 years later. She did not receive an answer.

This year in July another letter requesting payment arrived now they want R25000.00 - with interest added.

Is it not possible that the payment lapsed in 6 1/2 years?

[sterne.law@gmail.com]

The prescription period is calculated from the day the debt became due. Being a student loan, it probably only became due at the end of the study period. Some student loans may even allow for a 1 or 2 year period after the studies are completed in which to pay. You will need to check the student loan as to when it became due.

[Freakylady]

I have a similar query, I allegedly incurred a medical bill 10 years ago. I found out on Friday that I had been blacklisted on the 12 August 2010 for this debt. They guy did phone me a few years ago probably about 3 or 4 years ago demanding this money. I asked for an email breakdown of the alleged debt but never recieved anything. Now I'm trying to find the guy, have is office number but they have an answering maching. Doesn't answer the phone and doesn't return calls. How do I go about sorting this out?

[Dave A]

Dispute the listing with the credit bureau that has you listed.

[Phil Cooper]

Prescription

Prescription expunges a debt after 3 years - there are exceptions, such as Municipal Rates and SARS Tax due.

However, for it to apply, you must claim it. So, when you get a 6.5-year-old demand, reply, pointing out the debt has prescribed and is no longer owing.

But - if you send ONE CENT towards it, it re-opens.

If you have been blacklisted, contact the company and advise them that the debt was prescribed, you are NOT liable, and they must remove the blacklisting.

[Freakylady]

Thanks for the info guys, I lodged a complaint with the credit bureau this morning.

I'm just so frustrated because it was unnecessary. Had I known we could have sorted it out. The grand total for the listing is round R500!!

They should be forced to pay punitive charges for the inconvenience of them flaunting the law.