the prescriptions of the National Credit Act - Section
80 to 84, regarding reckless credit.
any account was opened after 1 June 2007,
or your credit limit increased,
and this accounts caused you to become over-indebted,
please inform your debt counsellor.
accepting a credit agreement, the creditor must
first provide you with a pre-agreement. The pre-agreement
must provide you with all information, such as %
and amount of interest, amount of costs, what the
full agreement will cost you, etc.
are also prescribed maximum interest rates and fees/costs
a creditor can charge.
will get a transcript of the phone call,
or a copy of your application, to make
sure you have provided ALL the information regarding
income, expenses and credit agreements at the time.
onus is on the creditor to make sure a consumer
can afford more credit. The Credit Act prescribes
that a creditor must do an assessment and must confirm
income, take into account other credit agreements
and make sure your budget is sustainable. Only after
this, they must be sure you can afford the
monthly repayment of the new agreement, before granting
ONLY a court can find reckless credit.
you can proof reckless credit,
a court will rule on this. In most cases, all
interest and costs on the accounts will be written
off and you will only pay back the capital, or
that the account must only be paid back, after
the other accounts were paid off. If we can proof
a creditor ignored the fact that you could not
afford more credit, the account can even be written
few creditors are found guilty, as in
almost all cases they can show that the
consumer provided untrue information.
However, if you suspect that you could not afford
another account that was granted, tell your debt
are the documentation we request from creditors:
provided by creditor
2. Transcript of telephone recording
3. Credit assessment
4. Credit bureau report
5. Salary advises
6. Proof of other income
7. Bank statements
8. Were rights and obligations explained
9. Was employment confirmed
10. Was income confirmed
12. Credit agreement
It is also
important that a creditor must verify information.
If you for instance put R500 for groceries for a family
of 5, the creditor must realise this is impossible.
forgotten about an account you had 10 years ago, but
now you receive a phone call, telling you that you
must immediately pay the outstanding debt. Collections
agents use different tactics, from that you can pay
as little as R20 now, while others use scare tactics,
by threatening that you will lose your home, vehicle
and furniture and will be blacklisted for the next
30 years - if you do not pay the account immediately.
Debt collectors very well know they are not allowed
to bully consumers into paying accounts which have
prescribed – but unfortunately consumers do not always
know their rights.
not believe these stories, if an account has prescribed,
it has prescibed and is not just dormant - you don’t
have to pay it any longer.
is a strong legal term. The Prescription Act
provides that the period of prescription of debt shall
be 30 years in respect of any ‘judgement of debt’
and 3 years for ‘any other debt’. A creditor therefore
has only three 3 years to enforce
civil legal action, to collect arrear debt.
is that in the case of ‘any other debt’, where no
payment has been made for a period of at least 3 years,
the debt has “prescribed”. This means that the debt
has been completely distinguished and does
not have to be paid.
was “written off” by a creditor, it does
not mean the debt has prescribed. It can show on your
credit bureau report “Debt written off”, while the
creditor still retains the legal right to collect
the written off debt, until the 3 years have lapsed.
In many cases the creditor just moves the debt to
a collections account, therefore showing “written
sell their Debtor’s Book of bad debt to debt collectors,
for a much lower price than what the collectable debt
is. The aim of the debt collector would be to make
profit from the book he bought. Many of the books
contain very old accounts, which have already prescribed,
but as consumers are ignorant about prescriptions,
debt collectors yearly collect thousands of rands
in unlawful collections.
GOLDEN RULES WHEN YOU RECEIVE A CALL FROM A DEBT COLLECTOR
AND YOU ARE NOT SURE THE ACCOUNT HAS PRESCRIBED:
o Do not
admit you owe money. Just say: “such an old account
has definitely prescribed” and put down the phone.
sign any acknowledgment of debt, as this will interrupt
the prescription period and the three years will start
o Do not
pay anything, as this will interrupt the prescription
in doubt, ask for a recon statement of your account.
Remember to mark it “without prejudice of rights and
admission of guilt”. The creditor must not only provide
you with a letter, stating you owe an amount – it
must include detailed information of first date of
default, all payments made, with dates, interest added,
costs, fees, etc.
ACCOUNT HAS NOT PRESCIRBED:
you admit, in any form, that you are liable to repay
the debt. If the three years have not prescribed,
and you admit the debt, the prescription period will
be cancelled and starts running again. Remember,
creditors record phone calls, so you cannot deny it
the Debtor’s Books sold, are of debt on the brink
of prescription. To get a judgment will take a while,
so the three years can lapse, before the collector
can get a judgment - but if you admit you are liable
to pay the account, even a day before the 3 years
lapse, the three year prescription will start running
again - and be sure you will end up with a judgment
NOT SIGN ANY REPAYMENT AGREEMENT!
a creditor got a judgment (within 3 years), which
will then stands for 30 years and you will be held
liable for the outstanding debt, interest, costs,
as well as legal costs – for the next 30 years.
as you become aware that there was a judgment granted,
immediately make arrangements with the creditor to
repay the money, or the Sheriff of Court will repossess
your assets, to pay your debt with. You will be held
responsible for any shortfalls if the debt is not
settled after the auction of your possessions.
collector/creditor cannot just tell you he obtained
a judgment, he must provide you with a copy of the
judgment, and if you are still in doubt, phone the
Clerk of the court where the judgment was granted,
give the case number, and ask to confirm the judgment.
that does not prescribe:
owe to the State
o TV Licences