Does my debt expire? 

In South Africa we have laws that regulate when our debt expires. The laws that regulate it is the Prescription Act as well as the National Credit Act.

When you owe someone money (i.e. a creditor), that party only has three years to institute legal action against you.  Should they not issue and serve a summons within the three-year period, the creditor runs the risk of the claim expiring and they may lose out on the money owed to them.

The only way for the creditor to stop prescription of the debt is to issue a summons or for you to sign an acknowledgement of debt or once you have paid an installment.

For example, if you are in agreement with a person to pay off a debt owed to them in installments, their claim against you will prescribe three years from the last installment you paid to them.   If you both agreed to sign an acknowledgment of debt and no instalments have been paid, your claim will prescribe three years from the last signature of the acknowledgment of debt. If they failed to issue and serve a summons on you within the three-year period, their claim against you expires.

The National Credit Act stipulates that it is illegal for credit providers or debt collectors to institute legal proceedings knowing that the three-year period has expired.

There are however some exceptions from the three-year prescription period, including but not limited to:

        Prescription after 30 years:

• Mortgage Bonds and tax related debt;
• A court order;
• Any debt in respect of taxation imposed or levied by or under any law;
• Any debt owed to the state (relating to share of profits, royalties/considerations payable in respect of mine minerals or other substances)

Prescription after 15 years:

Any debt owed to the State (loan debt, land leased debt and debt relating to land purchase debt.  (This would include rates payable to the Municipality in respect of your property).

Prescription after 6 years:

Any debt arising from a bill of exchange or negotiable instrument (example: cheques) or from a notarial contract.

There are various other factors, which can also delay prescription, such as being outside the borders of South Africa, debt between partners emanating from a partnership, claims against the estate of a debtor who is deceased, a claim against an insolvent estate, a company that is in liquidation or claims where minors are involved.

Contact our office on (021) 824 2024 if you have any questions relating to whether your debt has prescribed or if a debt collector continues to contact you even if your debt has prescribed.