Debt: Legally cancelling a debt over 3 years old

[Citizen X]

1. It’s clear that default judgment was obtained against you. Default judgment is granted when a defendant does not file a notice of intention to defend. A judgment is collectable for 30 years but only stays on credit bureaus for 5 years after which it is automatically expunged. A judgment creditor is well within their rights to obtain a garnishee order i.e. debit order against your salary. This is simply done by contacting your HR;
2. Extinctive prescription does not take place automatically. For certain types of debt if a period of 3 years has elapsed from the date of your last payment, you become eligible for extinctive prescription. Should you not claim extinctive prescription, a creditor is well within their rights to sue out summons, in which case judicial process interrupts prescription.
3. The best way forward for you, given the fact of judgment is to pay the judgment creditor in full, get a consent affidavit from the creditor wherein they, in the prescribed manner, consent to rescission, you then instruct counsel and have an attorney go to court to have the judgment rescinded.

[Defcon]

Vanish,

Your advice on this thread is much appreciated. I was contacted by a debt collector today, and not being aware of how things work acknowledged my debt. However the default was over 3years ago and I just want to know whether the acknowledgment on such old debt would give them further grounds to collect? I have not made payment, but would like to know what my options are.

Thanks in advance

[Citizen X]

1.It depends on how the acknowledgement was made. The Act allows for even tacit acknowledgement. The Act is silent on unlawful duress. Quantitative research revealed that more than 2000 people out of 3086 were threatened with warrant of arrest at their work and this caused them to pay,
2. It also depends on what the amount is. Litigation is costly, it’s not worth anyone’s while to go to court over a few thousand rands.
3. Under the circumstances you still have the right not to pay, but the creditor still has the right to sue out summons. You can change the summons on merits or raise prescription;
4. It can’t harm to still claim extinctive prescription.
I’d just like to take this opportunity to explain something. Substantive law deals with rights and obligations, so it can tell you what your rights are and what obligations you have or no longer have.BUT, it adjective law in particular civil procedure which gives you the very specific method for recourse through the courts i.e. either summons or motion proceedings. Courts are moving towards motion proceedings because it’s cheaper and far quicker to completion.
With extinctive prescription, you can claim extinctive prescription directly from the creditor or if a matter proceeds to court, raise it as a special plea…

[Mark101]

Hi Vanash,

I have a quick question if you dont mind, do all debt at the bank have a 30 year period for collection (ie: personal loan) or is it just applicable to home loans?

[Citizen X]

The sort answer is that all debts become eligible for extinctive prescription in 3 years besides tax debts, state held debts, and bonds. Bonds become eligible for extinctive prescription after 30 years! The 3 year category includes credit cards, retail apparel accounts, vehicle finance, furniture finance and yes personal loans. There are requirements however, it must not be a judgement debt, no payment must have been made in this period and no acknowledgement of debt must have been signed in this period.. Soon I'm going to reintroduce extinctive prescription to such a point where the finished product will be beyond reproach!

[Citizen X]

A reintroduction to extinctive prescription
The case for extinctive prescription claims in South Africa
I have resolved to reintroduce extinctive prescription in an academically acceptable manner. To do so , one would have to have a source of references and some form of table of contents.
References: I will cite a full source of references at the end of this topic, it won’t be anything soon! In the interim, I’ve resolved to using footnotes to cite references.
Table of contents: I do have a table of contents, but it won’t be possible to include page numbers for the purpose of these posts, but you may accept that posts will follow the table of contents.
Posts in stages: I will make posts in stages, and number them i.e. Post 1

[Citizen X]

Post 1

TABLE OF CONTENTS
Number	Item	Page
1	Introduction
2	Hypothesis
3	An Outrageous Question
4	The Prescription Act as a Statute
4.1	A Statute remains an active Statute until repealed
4.2	The National Credit Act and a sense of urgency, The Prescription Act 68 of 1969 and no sense of urgency
4.3	No definitional clause in 1969 Act
5.	Historical Framework
5.1	Prescription dates back centuries
5.2	Extinctive prescription forms part of South African Private Law
6	Interpretation of the 1969 Act
6.1	Statutory interpretation
6.2	Stages of interpretation of the 1969 Act
6.3	The concept of extinctive prescription
6.4	The common law position of extinctive prescription
6.5	Extinctive prescription in practice
6.5.1	Meaning of as soon as the debt is due
6.5.2	Meaning of debt
6.5.3	Debtor’s wilfully preventing creditor from becoming aware of the knowledge of the debt
6.5.4	Knowledge of the debtor
6.5.5	Corporate South Africa is by and large an exception to section 13 of the 1969 Act
7	The difference between an extinctive prescription claim and a special plea of prescription
7.1	Example of Plaintiff’s particulars of claim
8	The need to invoke extinctive prescription when claiming prescription directly from a creditor
8.1	A case in point
8.2	Remedy in cases where the creditor refuses to process an extinctive prescription claim
8.3	Debt review and extinctive prescription
9	A parallel between Public Law and Private Law
10	Professional ethics and an attorney providing a debt collector function
10.1	Estoppel
10.2	Law and a crisis of an ethical nature
11	Choice of research framework
11.1	Research design and methods
11.2	Quantitative research
11.3	Post mortem Questionnaire
12	Qualitative research
12.1	Background
12.2	The pre-determined approach
12.2.1	Mr A
12.2.2	Mr B
13	An investigative journalism approach
13.1	A gross abuse of the section 57 and 58 procedures of the Magistrates Court Act 32 of 1944
13.1.1	Mr F and an eighteen year old debt
13.1.2	The document Mr F signed
14	A theory as to why a potent statute can become diluted over time
14.1	Distortion of communication
14.2	A case in point
15	Findings
16	Recommendations
17	Conclusion
18	References
	Annexure A: Questionnaire

[Citizen X]

1. Introduction
This work will address the practical position of extinctive prescription claims in South Africa today. It will address the ease alternatively the difficult of claiming extinctive prescription in terms of section 11(d) of the Prescription Act 68 of 1969. It will reveal shortcomings in industry and the Prescription Act itself and perhaps more importantly it will make recommendations for the amendment of the 1969 Act. This work in and of itself is an impassioned plea to the South African Law reform commission to initiate the amendment of the 1969 Act. The purpose of such recommended amendments is to make the Act more meaningful and applicable to a debtor who is eligible for an extinctive prescription claim and simply wants to claim extinctive prescription. The finished product of this work includes: An extinctive prescription precedent, a recommended covering letter, a recommendation of how the Act should be amended, a recommended schedule where such a schedule would be preferred to an amendment, a recommendation for enabling legislation where enabling legislation would be preferred to an actual amendment of The Act or an addition of a schedule to the Act and a recommendation for a training program on extinctive prescription with specific learning outcomes. This paper will address debts which become eligible for an extinctive prescription claim after a period of 3 years has elapsed from the date of the debt becoming due without any events that interrupt prescription. For classification purposes the natures of these debts are: 1. personal loans, credits cards and vehicle finance providers by registered financial service providers, 2: Retail apparel and accessories provided by registered retail credit providers, 3: Furniture and household goods and appliances provided by registered retail credit providers and 4: Telecommunication goods, service and accessories provided by registered credit providers. My reference to creditor is by and large corporate South African banks, financial institutions and major retailers. This reference is not only essential but rather quite vital as I will demonstrate in this essay that by and large the provisions of sections 12(2), (3) and section 13[with the exception of section 13(b)] will not be applicable to these organisations alternatively will not find reference to any meaningful dispute where such organisations are the creditor. For the purposes of extinction of debt by the passage of time, sections 10 up to and including section 18 of the 1969 Act apply. What I’m about to postulate is at immediate odds with ‘SLRC Discussion Paper 126, Project 125, Scope of Review’(2011:5) where it is provided that, ‘The review is limited to harmonisation of prescription periods, and does not include a general review of prescription in general, or the extinction of debts by prescription in particular.’

2. Hypothesis
The Prescription Act 68 of 1969 appears to be an unproblematic South African Statute. This inference is drawn because the Act itself is fairly straightforward and the requirements for extinctive prescription are reasonably clear. The Act in and of itself does not answer many pertinent questions such as: How does one claim extinctive prescription? How does a creditor process an extinctive prescription claim? How does the finality and legal certainty which extinctive prescription is designed to promote get implemented? Does the creditor merely access the debtor’s account and add a note, “This debt is prescribed, the debtor has claimed extinctive prescription,” or does the creditor confirm to signed letterhead that a debtor has claimed extinctive prescription; the prescription claim has been processed, that the debt is prescribed, that the creditor abandons his claim and that all credit bureaus have or will be updated accordingly? The ultimate problem statement is: How does a debt, regardless of its monetary amount, which is eligible for extinctive prescription, becomes extinguished by prescription in practice to a point where a debtor legally owed a certain amount of money to a creditor yesterday to a point where after the fact of an extinctive prescription claim the debtor no longer owes the creditors any money whatsoever and there is certainty about this fact both to the creditor and to the debtor.
Given the overall aims set out above and for the sake of a clearly defined hypothesis, I have chosen a slight deviation from conventional hypothesis by dissecting my hypothesis into six problem statements.
1. Many financial institutions and major retailers don’t have rules, regulations, policy and procedure in place to process extinctive prescription claims;
2. Many financial institutions and major retailers cannot appreciate the difference between an extinctive prescription claim and a special plea of prescription;
3. Many debt collectors and attorneys acting on instruction of financial institutions and major retailers intentionally preclude a debtor from claiming extinctive prescription and engage in unethical conduct to get a debtor to unwittingly make a payment on a debt that would otherwise be eligible for an extinctive prescription claim. The debtor then unwittingly acts to his/her own prejudice by causing the prescription period to run afresh
4. Many debt collectors and attorneys acting on instruction of financial institutions and major retailers intentionally preclude a debtor from claiming extinctive prescription and engage in unethical conduct to get a debtor to unwittingly acknowledge debt that would otherwise be eligible for an extinctive prescription claim. The debtor then unwittingly acts to his/her own prejudice by causing the prescription period to run afresh
5. There is a training and development need for extinctive prescription in banks, financial institutions and major retailers. Many financial institutions and major retailers don’t know how to process an extinctive prescription claim. It’s not a case where they don’t want to process such an extinctive prescription claimbut more a case that they don’t know how to process an extinctive prescription claim simply because they received no adequate training on extinctive prescription.
6. Many financial institutions and major retailers are used to a situation where they enforce their rights to collect a debt either by using their own internal special collections department, a debt collector or an attorney. Consequently they are used to a situation where they sue out summons for a debt and in many cases easily obtain judgment as the debtor does not file a notice of intention to defend. The aforementioned are simply not used to a situation where a debtor attempts to enforce his/her rights with regards to extinctive prescription. An analysis of these presuppositions will highlight the plight of a debtor who merely wants his/her debt obligation to be extinguished by extinctive prescription based on what the law itself says.
Gilmore S (2011:1) states that, the art of practising law is not to know all the answers, but to know where to find the answers. In order to find the answers, the practitioner must know what to look for. In order to know what to look for the practitioner must be able to sift the facts at hand and to define the problem he or she is dealing with’ (V Tunkel & A de W Horak xi). Academic study should teach one the requisite skills to ‘sift the facts at hand’. However, one is still left with the problem of finding the authority that you need to substantiate your case or finding the written law that will back up whatever case you are making. The information lies in all the physical (both print and electronic) sources of our law — the common law; the legislation; the law reports; the books and the encyclopaedias.
I intend to substantiate my case.
3. An outrageous question
Reason with me! Is it necessary for us to reinvent the wheel by using the concept of the ‘Twelve Tables,’ to articulate that certain debts become eligible for an extinctive prescription claim alternatively prescribe after the passage of a certain period of time? In order to give full effect to this outrageous question alternatively satirical gesture, a Twelve Table equivalent would be a large notice board in every bank, financial institution and major retailer’s various branches stating that certain debts prescribe after 3 years has elapsed from the date which the debt became due alternatively the month after the date of the last payment, provided that no payments have been made within this 3 year period, no acknowledgement of debt has taken place and no summons has been sued out! There you have it! Our problem statement glaring at us from this page namely most debtors are unaware of their rights with regards to extinctive prescription and the actual procedure of processing an extinctive prescription claim are widely varied in Banks, Financial Institutions and major retailers. What we require here is simple standardization. Allow me to reason with you to a point where we all draw the same conclusions. To reason means to be able to identify and follow the arguments presented by specific thinkers (i.e. what claims are made or conclusions drawn and how they are substantiated [the premises]) and to be able to assess the quality and validity. UNISA(2012: vii). All reasoning is thinking, but not all thinking is reasoning. Copi (1969:4). Since valid inferences are inferences where the conclusion is logically entailed by the premises, interest in logic is focused on the study of logical entailment or consequence. All wood et al(1997:16). Reason with me!

[Citizen X]

4. The Prescription Act as a Statute
The Prescription Act 68 of 1969 is classified as a statute, alternatively legislation, alternatively an Act of Parliament, alternatively enacted law texts.^[1] It may also be classified as original legislation. This Act was assented to on 23 May 1969 and commenced on 1 December 1970. It was gazette on 4 June 1969; Government Gazette number 2421 Volume 48, as at this time one could buy the Government gazette from any Post Office for 10 cents.^[2] There is no doubt whatsoever that it is an authoritative source of South African Law by mere virtue of its classification as an Act. The 1969 Act is not an academic opinion neither is it an article in a law journal. It is for all practical intents and purposes the law.
4.1 A Statute remains an active Statute until repealed
Regardless of how the implications of its provisions may be accepted by creditors and debtors, it remains the law. The notion that corporate South Africa may find it to be unjust in so far as it brings about the extinction of a right to claim a debt after the passage of time, either by the debtor claiming extinctive prescription from the creditor or by the debtor filing a special plea of prescription in court, does not negate the fact that the Prescription Act is law and remains law. A law, an Act of parliament need not be just, reasonable or fair to be law. In fact we have a number of Acts which are perceived to be unjust, unreasonable or unfair. The Choice of Termination of Pregnancy Act 92 of 1996 is just one example. Many religious organizations have expressed outrage of the practical implications of this Act which allow for a woman regardless of her age to have an abortion legally. The outrage expressed is of no consequence to the Act itself nor does it change its status as Legislation. The 1969 Act should be understood from this perspective. It is a legitimate statute in much the same way as: The Criminal Procedure Act 51 of 1977, The Divorce Act 7 of 1979, The Wills Act 7 of 1953, The National Credit Act 34 of 2005 and the Consumer Protection Act 68 of 2008, to name a few. If one were to ask a simple question: What do the aforementioned have in common? The simple answer would be they are all statutes.
4.2 The National Credit Act and a sense of urgency, The prescription Act 68 of 1969 and no sense of urgency
The National Credit 34 of 2005 and its resulting regulations have impacted directly on litigation. A creditor must first send a letter of demand which is delivered to a consumer at his address before suing out summons. The Plaintiff’s Particulars of Claim will invariably contain the following or similar assertion (Particulars of claim will never start with this paragraph! It’s included here to demonstrate that the NCA is held in such high regard that even obligatory paragraphs need to be included in the Plaintiff’s particulars of claim):



5 The Plaintiff is entitled to approach the Court for an Order as contemplated in Section 30 of the National Credit Act of 2005 in that:
5.1 The Plaintiff issued a Notice to the Defendant in terms of Section 129 of the Act and delivered such Notice in the prescribed manner,

5.2Notwithstanding the above, the Defendant has not responded to the Notice, alternatively has responded to the Notice by rejecting the Plaintiff’s proposals;
5.3The time periods, as prescribed in Section 130 of the Act has lapsed;
5.4The Plaintiff has no knowledge of any debt review proceedings instituted by the Defendant as provided for in section 86 of the aforesaid Act.
With the commencement of the National Credit Act 34 of 2005, we have seen changes to Court Rules, changes to the how litigation should commence, a body which one can complain to for non- compliance by the creditor and Corporate South Africa developing policy documents and training programs to be compliant. This is in stark contrast to The Prescription Act.

4.3 No Definitional Clause in 1969 Act

On conducting a post mortem of this Statute with the precision of a surgeon about to conduct surgery, it was alarming to find that the 1969 Act does not include a definitional clause section nor does it have a preamble. A preamble is necessary to clarify the underlying philosophy of the Act. The next enquiry is then: What is the purpose of the 1969 Act? The purpose is found in the long title. In this case it simply states ‘To consolidate and amend the laws relating to prescription’.^[3]The 1969 Act does have practical importance.^[4] It should be the subject of greater theoretical analysis and it should not be seen as a technical and theoretically unrewarding aspect of statute law.^[5] If it is accepted that the 1969 Act is a rule of law and further that there is some degree of uncertainty as to its interpretations by both creditors and debtors and further that there is uncertainty as to the difference between an extinctive prescription claim and a special plea of prescription, then it should at the very least be also accepted that some form of procedural-law mechanisms are required to give proper effect to the 1969 Act. Law means any law, proclamation, ordinance, Act of Parliament or other enactment having the force of law.^[6]

5. Historical framework

5.1 Prescription dates back centuries

The concept of prescription is not new at all. It originates from Roman law. It dates back to what is commonly referred to as ’The era of early Roman Law(753 BC – 250 BC).’^[7]The earliest manifestation of prescription dates back to 450 BC to what is known as the ‘Twelve tables.’ The law was literally written on metal plates and placed in the central business district of that day. Anyone could go and inspect this written law.^[8] In 448 BC extinctive prescription was not distinguished from acquisitive prescription. It noteworthy that the concept, that one could obtain rights, merely by the passage of time can be traced to The Law of the Twelve Tables. The Twelve tables were written on twelve bronze tablets which were strategically placed in the central business district of that day so that all could read its contents. Table six, law six reads as follows: ‘Immovable property shall be acquired by usucaption after the lapse of two years; other property after the lapse of one year.’^[9] So there it was for everyone to see, the simple passage of time could allow you obtain rights today, which as early as yesterday you did not enjoy!^[10]
The nature and effect of prescription will always remain the essential point of departure. The first prescription time period was introduced by emperor Theodosius in AD 424. It was referred to as praescriptio longi temporis.^[11] Roman Dutch writers were largely unanimous in postulating that prescription has a strong effect, extinguishing the obligation itself as well as the remedy.^[12]

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[1] Vide Prescription Act 68 of 1969 http://0-discover.sabinet.co.za.oasi...ument/NTL12110

[2] Vide http://0-discover.sabinet.co.za.oasi...Gov/gg2421.pdf. Date of use 3 July 2012

[3] Loc cit n 4

[4] Loc cit n 4

[5] Vide MM Loubster. Extinctive Prescription. 1996. 1

[6] Loc cit n 4 Prescription Act 68 of 1969 & Vide s 2 Interpretation Act 33 of 1957. http://0-discover.sabinet.co.za.unisa.ac.za/document. Date of use 3 July 2012

[7] Vide Origins of South African Law Studyguide.2008. 44

[8] Op cit 49

[9] Vide The Law of the Twelve Tables http://www.constitution.org/sps/sps01_1.htm. Date of use 3 July 2012 et seq Law of the Twelve Tables http://www.britanica.com/ebchecked/t...-Twelve-Tables

[10] Confer Van Oven JC. Leerboek van Romeinsch Privaatrecht. (3rd ed 1948). 82

[11] Op cit page 4 MM Loubster

[12] Ibid page 5, confer De Wet Opuscula Miscellanea page 104
To be continued......

[mligas1]

Hi Vanash

I have been searching through the net for similar situations as mine and happen to come across this forum and thread. I enrolled with a well known tertiary institution back in February 2008 for a 1 year course and only paid registration fee + tuition for that quarter. I attended until around September on and off and couldn't make it anymore because my schedule couldn't accommodate this and i couldn't afford to make payments. Nobody contacted me since until one dreaded day in November 2011 when a debt collection company called In-quest contacted me saying i know i owe and must make payment. They gave me a six month option which was too much per month and then extended to a twelve month option which was still too much per month. Last contact they made with me was in June 2012, and then today, where we had a massive argument. No insults nor bad words were exchanged, but they claim i committed to something which i did not. I asked them if their calls are recorded as they say they are and to go and QA all the last recorded calls and they refuse. Now just over 3 years later since inception of this debt, what do i do? i have no letters or anything from the institution, nor the debt collector.

Please assist with some advise.

Regards