Pressured by Debt Collectors to Pay off Old, Inflated Debts
You may have heard of the new regulations regarding prescribed debt under the National Credit Amendment Act, which came into effect as of March 13. But do you fully understand the implications thereof?
According to the Prescription Act, it’s illegal for companies to sell prescribed debt, or to collect it. More importantly, it also means that you, the consumer are no longer required to raise the defence of prescription or even be aware of it, in order to avoid paying a company or collector.
If debt collectors are leaning on you for an old debt, which you suspect has prescribed, as you have not made any payments towards it, for the past 3 years, consider the following:
Invaluable Advice on Dealing with Persistent Debt Collectors
- Do not acknowledge that the debt – by all means don’t express that you owe anything aloud and DON’T SIGN anything.
- Do not make any promises to pay the debt – this would make you liable to pay the amount demanded, including years of collection fees and interest.
- Do not confess to having received a summons, as a way of getting collectors off your back. Many consumers simply cave and sign a document they don’t understand, due to coercion and intimidation, especially if they are unaware of their rights.
- Don’t take cession of the debt – once again, don’t sign anything! You may just be consenting to a garnishee or emolument attachment order, which allows the collector to compel your employer to deduct payments from your salary every month.
- Remember, a SA court judgement of debt, government debt (taxes, municipal debt, TV licenses etc.) and home loan/bond debt only prescribe after 30 years.
- If you have signed a surety, making you the co-principal debtor and obtain a judgment, you could be held liable for the debt for a term of 30 years.
- All other debt, related to credit agreements, such as car finance, credit cards, store or retail accounts, etc. prescribes after 3 years. This debt makes up 94% of all SA debt!
- If you’ve already acknowledged the debt in some way, prescription may still apply, but only if you are a minor, live outside SA, are married to or in business with the creditor/collector, or the debt is related to arbitration or a claim against the estate.
- Hold your ground, screen their calls, don’t call back or respond to their SMSes. Even better, contact Reduce My Debts immediately for assistance.
Chasing Old Debts
The intended purpose of the Prescription Act was to motivate creditors and collectors to collect debts, in order to resolve these matters quickly. Conversely, many collectors and credit providers chose to capitalise on the thriving ‘business of chasing’. As follows, they put off collections, only to stalk consumers many years later and strong-arm them into paying off old debts, bloated by interest and collection costs.
Apparently, the chasing business is still alive and well, according to numerous consumer reports. Many consumers, who are still unaware of how the new amendment really works, continue to give in to collectors.
Again, it’s not up to the consumer to raise a prescription defence to get out of paying old debts. Collectors are acting illegally by requesting that you pay a prescribed debt to begin with.
A Prescribed Scenario
Imagine you are contacted by debt collectors claiming that you haven’t paid for a purchase on a retail account, which you recall having paid off 5 years back.
However, despite living in the same house and working at the same company all these years, the collectors have not contacted you up until now, suddenly claiming you owe payments on the account, along with interest and collectors fees.
Under the National Credit Amendment Act, you are not obligated to pay off this debt, even if you are not aware of prescription. The onus is on the retailer or credit provider to prove that you owe this money.
Even if the collectors attempted to collect the debt from you before this date, legally the retailer is required to instruct the collector to close the debtor’s file and desist from pursuing payment, if the debt has prescribed.
A Case in Prescription
On the other hand, let’s say you were contacted by debt collectors late last year, claiming that you owed money on a car that was repossessed 8 years ago.
You naturally assume that the sale of the car covered your outstanding balance, as you weren’t contacted at all thereafter to make any further payments. Despite having the same contact number and an unaffected credit record.
The collectors attempt to contact you, leaving urgent messages on your voicemail, without really clarifying the nature of the debt. You don’t, however, call them back, avoiding their calls and texts well beyond March 13, 2015.
Simply refraining from paying the debt does not prove it has prescribed. However, if the company fails to provide any proof of you acknowledging the debt, having made any payments towards it, or receiving a summons in relation to it, under the law the debt has prescribed.
As long as you don’t take cession for the debt, it essentially expires. And remember, it’s not your responsibility to raise a prescription defence, this rests with the credit provider and their collectors. Your file ought to have been closed after March 13 and all contact stopped. If this is not the case, we strongly advise you contact Reduce My Debts for help today.
