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

What happens to debt after five years? 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 (can be written off) or public record and why. Ready?

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

There are two paths your debt after five years can meander down once it hasn’t been paid: becoming prescribed or public record. Remember 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 contacted the lender.

The period it takes for debt to become prescribed depends on what debt it is. Mostly, debt after five years becomes prescribed.  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.

Debt older than 5 years in South Africa: what “prescription” really means

In South Africa, most ordinary consumer debts, personal loans, credit cards, store accounts, can “prescribe” after three years, not five, under the Prescription Act. Prescription means the debt becomes unenforceable and a creditor can no longer legally claim it in court. But there are important conditions, and it is not automatic.

When a debt does NOT prescribe

The three-year clock resets, and the debt stays enforceable, if within that period any of the following happen:

• You acknowledge the debt, even a verbal admission or a part-payment counts.
• You make a payment towards the account.
• The creditor issues summons and pursues the claim.

Some debts also have longer prescription periods, for example, a home loan (mortgage) and debts confirmed by a court judgment run for up to 30 years.

Be careful: acknowledging old debt restarts the clock

This is the trap. If a debt is close to prescribing and a collector calls to “arrange a small payment,” making that payment or admitting the debt can reset the three years and revive a claim that was about to fall away. If you are contacted about a very old debt, get advice before you agree to anything.

How this fits with debt review

Prescription applies to specific old, dormant debts. If you are currently over-indebted and struggling with active accounts, debt review is the tool that helps, it reduces your monthly repayments and protects you legally while you pay them off. The two are different solutions for different situations.

Frequently asked questions

Can a creditor still phone me about a prescribed debt?
They may contact you, but if the debt has genuinely prescribed they cannot enforce it in court, and you are not obliged to acknowledge or pay it. Do not make a payment or admit the debt before confirming its status.

How do I know if my debt has prescribed?
It depends on the type of debt and the last date of acknowledgement or payment. A registered debt counsellor can help you work it out.

Struggling with your current debt? Talk to us.

If it is your active accounts that are the problem, Debtco Group (NCRDC 3277) can help you reduce your monthly repayments through debt review. Call a registered debt counsellor on 021 007 1422 or request your free, no-obligation assessment. Learn more about how debt review works.