Prescribed Debt

We come across 100’s of clients paying old debt due to lack of education on prescribed debt.  According to the Prescription Act 68 of 1969; debt becomes null and void after a certain period of time.  If you have not changed telephone numbers, moved locations, nor received any communication from your credit provider of the outstanding debt; this debt becomes Prescribed after a 3 year period. This means that the creditor cannot issue you with any legal notices after this period has lapsed nor can they harass you for payment. If the creditor does not claim payments of the debt by means of a letter of demand or summons within this 3 year period; this debt would then become prescribed.  To give you an example; John took a loan with Bank A, May 2006.  His circumstances changed September 2007 and was unable to continue paying his debt obligation.  His creditor does not contact him by October 2010, this credit agreement with Bank A will now become prescribed. 

The most common way in which this “old” debt can become active again is when attorneys contacts consumer and consumer acknowledge the outstanding debt.  Generally legal firms buy these old debtors books from credit providers for a fraction of the outstanding debt amount, then contact the consumer to reactivate the debt either verbally or written acknowledgment of the outstanding debt.  The minute the consumer acknowledges this debt, attorneys can now proceed with legal action for collection of the outstanding debt.  Therefore when faced with old debt resurfacing, it is advisable to let the consultant know that this debt is prescribed and that you have no obligation to pay it. 

This is a basic overview of prescribed debt; should you need further clarification or advice on your prescribed debt.  Please feel free in contacting a Debt Check consultant who will help you determine whether your debt is prescribed and what to do should an attorney contact you.

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