When does debt expire in South Africa?

10 AUGUST 2023

Have you ever wondered how to get your debt written off in South Africa or how long it would take? Find out more about expired debt.When does debt expire in South Africa?Consumers who are struggling to make repayments often wonder about the conditions that allow their debt to be written off. But, is it possible? The answer depends on whether the debt is regarded as prescribed or not. Below we’ll unpack the various conditions.The prescription of debts in South Africa is regulated by the Prescription Act 68 of 1969, as well as the National Credit Act 34 of 2005.

A prescribed debt is, to put it simply, an obligation that has essentially "expired." Usually, debt is said to have been prescribed when after three years have passed and the creditor or debt collector has not filed any legal action or requested payment of the outstanding balance. However, for loans like a mortgage or tax-related debt, it can take up to 30 years to be regarded as prescribed.

In the past, creditors would frequently overlook a debt, let it accrue interest, and then start collection efforts when it had grown to a substantial amount above the original balance. Consumers who were not aware of their rights during this process were required to pay exceptional sums. It was the legal obligation of the consumer to present the prescription as a defense.

This was the case until the National Credit Act 34 of 2005.

The most popular strategy debt collectors use to make sure the debt doesn’t expire is to try and get the customer to acknowledge the debt, either directly or indirectly, by calling them nonstop. In other words, if you interact with them and acknowledge the debt, you might be responsible for it again, and they would have a case to try to collect it from you. The following situations may result in a prescription interruption:

  • Being outside of South African borders
  • Making a contribution toward the debt
  • Having legal action taken against you in relation to the debt

To be clear, this does not imply that you should disregard your debt. When you do this, it may result in the seizure of your property or additional legal action, both of which could require you to pay much more than the original debt balance.

Can you get arrested for avoiding your debt repayments?

Depending on the type of loan you owe, you may or may not go to jail for not making your payments. You could end up in jail if you fail to pay your taxes or child maintenance, for example. The rationale is that failing to pay your taxes or child support is an offence that can be characterised as contempt of court. You risk receiving a sentence of up to six months in prison in addition to penalties, court costs, and attorney fees.

It is illegal for creditors like banks to make an attempt to collect on the debt that has already been prescribed. However, a customer will not be successful in using prescription as a defense in court once they have recognized owning the debt, even if they have not made a payment.

First prize is to keep up with your repayments

If the creditor decides to take legal action and the court rules in favour of the creditor, The Ombudsman for Banking Service cautions that the debt, which had not been prescribed, will have accumulated considerable amounts of interest and would be far more than the sums initially owing. In many cases that they’ve witnessed, the complainants also had to cover the legal fees and other expenses related to the unpaid invoices in the interim.