What Happens to Debt Older Than 5 Years in South Africa?

If you haven’t paid your debt for a precariously long time, say 5 years, what becomes of it? Well, what happens to debt older than 5 years in South Africa is dependent on the type of debt, communication between you and your creditor, and the steps you have taken to pay off the debt. Moreover, it relies on how your creditor has reacted to the default. This is what makes the debt prescribed or public record.

This post will take a deep dive into what makes debt prescribed or public record and why. Ready?

Here’s What Happens to Debt Older Than 5 Years in South Africa

There are two paths your debt can meander down once it hasn’t been paid: becoming prescribed or public record. Keep in mind that different sorts of debts have different prescription and public record timelines, discussed below.

Prescription Debt

For debt to be prescribed, it must meet two conditions. Firstly, your credit provider should not have endeavoured to contact you or pursued debt repayment by claiming payment or taking legal action. Secondly, you should have not acknowledged the debt by making payments or contact with the lender.

The period it takes for debt to become prescribed depends on what debt it is. For personal loans, credit cards, store accounts, and auto loans, the timeframe is three years. Therefore, debt older than 5 years in South Africa is (mostly) no longer collectable. In contrast, home loans, court-ordered debts, and money owed to SARS’ period is extendable up to 30 years.

Beware of acknowledging the debt in any way, like agreeing to make payments or paying toward the debt, as this can restart the clock. You can read more about prescription debt in the Prescription Debt Act.

Public Record

If you have defaulted on a debt and have not paid up after numerous calls from creditors and debt collectors, the creditor can take legal action against you. The debt does not become prescribed because the creditor has taken measures to contact you. If you don’t fight the ensuing lawsuit, the debt is entered into public record and will remain there for up to 5 years, or until paid up.

If your debt is less than 5 years old and you’re struggling to meet payment obligations, it may be time for debt review/counselling. This is a legal process wherein a debt counsellor will negotiate with creditors on your behalf for reduced interest or payments. It will also protect you from legal action. Get in touch with Debtco Group now for help getting out of debt. It is possible to regain financial freedom.