What does prescription mean?
* The Prescription Act 68 of 1969 (“PA”) says it means a debt (for example payment of money) is extinguished after the lapse (passing) of a time period.
* South Africa had different laws which specify time periods, for example the PA says that contractual and delictual debts extinguish after 3 years from when prescription starts.
* Prescription may be delayed or interrupted.
What are the consequences of an extinguished debt?
* The debtor is not liable to the creditor for a debt after the time period has lapsed. (3 years)
* The creditor may not institute legal action against the debtor for a debt that prescribed.
When does prescription start?
* As soon as the debt is due (a debt is due once the creditor can identify the debtor and the facts from which the debt arises).
* If the debtor prevents the creditor from gaining knowledge of the debt (excluding debts arising from agreements) prescription runs from when the creditor has knowledge of the existence of the debt.
When will prescription be delayed?
* Creditor is a minor, insane, or under curatorship
* Debtor is outside the Republic of South Africa
* Creditor and the debtor are married to each other
* Creditor and the debtor are partners and the debt arose from a partnership agreement
* Debt is the object of a dispute in arbitration; or
* Executor of a deceased estate has not yet been appointed
When is prescription interrupted?
The running of prescription is interrupted by:
* Acknowledgement of liablity by the debtor; or
* A service of a process on the debtor, where the creditor claims payment for the debt (for example, Kredcors Letter of Demand or Summons)
| Prescription time period: | |
| Time period before a debt is extinguished | Description of debt to be extinguished |
| 30 Years | * A debt secured by a mortgage bond |
| * A Judgement debt (given by courts) | |
| * A debt for tax | |
| * A debt owed to the state for profits relating to substances (such as mine minerals) | |
| 3 Years | * Contractual debts (Where debt/payment arises from an agreement between the debtor and creditor) |
| * Delictual debts (Where a debt/payment arises from damages caused by the debtor to the creditor) | |
How do you know if a debt has prescribed?
If, in the past three years, a debtor have not: made any payment towards settling a debt, acknowledged owing the money in any way or agreed to pay it in writing, or been summonsed in respect of it, the debt has prescribed.
The debt-collecting company or legal firm should close its file on the debtor.
The National Credit Act prohibits the listing of a prescribed debt.
It follows, then, that it’s unethical for debt collectors to use the threat of “blacklisting” in making demands for payment.
KEY:
* EXTINGUISHED – The debt comes to an end
* IMPEDIMENT – A hindrance or obstruction
* DELAYED – Prescription is suspended/put on hold to a later date
* INTERRUPTED – Prescription is broken and can start afresh