When debts lapse

A client of mine recently received a letter of demand by email from a law firm who said they act for Vodacom. The letter said that my client owes Vodacom just over R1000 which he must pay immediately or face the consequences. The client moved from South Africa to Canada 5 years ago. He used to have a Vodacom account, and he believes he settled it before he left. Nevertheless he forwarded the letter to me and asked how to respond.

As an attorney I was furious that my client could be treated in this way. From a non-attorney ‘s perspective, that may be an usual response. Let me explain. In South Africa, debts lapse after 3 years. That is called prescription, and we say a debt has prescribed.

Here are the details:

  • Debts prescribe after 3 years except for a few types of debt such as home loans and monies owed to SARS.
  • Prescription is interrupted if:
    • you make a payment towards the debt or
    • admit to the creditor that you do in fact owe them money, or
    • if the creditor sues you (in other words, you receive a court summons)
  • The three year period will start again at that point and your debt will only prescribe after the full three years is completed. In the case of a summons, prescription is permanently interrupted, and you can’t rely on prescription as a defence to paying the debt any more.
  • If you enter into debt before you are age 18, prescription is suspended until you turn 18. That means, the 3-year time frame only begins when you are 18 and your debt will prescribe when you turn 21.
  • If a creditor demands that you pay a debt that has prescribed, it is important that you raise the defence of prescription with them, in other words tell them the debt is not due because it has prescribed. If you do not, the creditor may proceed to collect the debt from you by suing you.
  • The National Credit Act makes it illegal for a creditor to collect a prescribed debt from you. If a creditor is taking any form of legal action to collect a debt after you have told them it has prescribed, be sure to appoint an attorney.

The outcome to my client’s situation was good- I wrote to the attorneys and explained that the debt had long prescribed. They wrote an email to Vodacom to point out the debt has prescribed and that they were consequently closing their file, and copied my client.

Moral of the story- don’t ever be bullied into paying prescribed debt!

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