When you can't be forced to pay
I've written about prescribed debt a number of times in 2006, but the issue continues to be raised by readers every week, so the advice is clearly worth repeating.
As always, I need to be very clear on the issue of consumers' responsibility to pay their debts, to avoid being accused of being irresponsible by encouraging people to avoid paying what they owe.
Of course consumers should stick to their commitment to pay what they owe. And if they fall behind in their payments, it's only right that they be made to pay interest and certain costs associated with recovering the debt.
But the reality is that some debt collectors are routinely adding excessive interest and costs to debtors' accounts, and then exerting extreme pressure on them to pay up.
A lot of these debts have prescribed, which means that they are old and debtors are no longer legally obliged to pay them.
In some cases the debtors are adamant they did pay the debt off, but they can't find the proof that they did, as it was many years previously.
The trouble is, the law places the onus on the debtor to raise prescription as a defence should the matter go to court. And sadly, many South Africans do not know that some debts prescribe.
The Prescription Act is comprehensive, but in essence, a debt is deemed to have prescribed if it's been three years since your last payment, and in that time you have not acknowledged the debt in any way, or been summoned in respect of it.
I should mention that certain debt does not prescribe, such as municipal debt, mortgage debt (home loans) and TV licence debt. But most of the debts currently being "chased" by debt collectors - such as clothing accounts and gym memberships - do prescribe after three years of inactivity.
In many cases, the debt has been written off by the credit provider and then bought - for very little - along with thousands of other written-off debts, by a debt collector.
The collector then adds interest and costs for all those intervening years, and suddenly contacts the debtor, demanding payment, and threatening legal action, credit bureau blacklisting, and sometimes even the loss of the debtor's home, if they fail to pay.
Remember, if they've bought the old debt, they're collecting for their own account - not that of a gym or retail store.
As word has spread about prescribed debt, so the debt collectors have begun to counter this response from alleged debtors. Some agents simply say: "You're talking rubbish, you must pay".
Others have come up with a more sophisticated response, such as this one, from a firm of debt collecting attorneys: "Kindly be advised that a claim of prescription will not exonerate you from the debt.
"You will remain indebted to our client unless decided otherwise by a court of law. In the interim we will continue to recover the outstanding debt until full and final payment is received."
In a sense, they are right. Only a magistrate can make that call.
So an appropriate response would be to tell the collector to either provide a statement showing the date of last payment to have been within the previous three years - or to immediately issue summons, so that the debtor can raise prescription as a defence in court.
Remember, you have a right to demand a full, detailed statement from anyone demanding money from you. It is not enough to simply set out the capital, interest and legal fees.
The statement must show the all-important date of last payment, and the handover amount.
If the collector will not provide this, approach the credit provider for help. Oh, and if someone approaches you out-of-the-blue about an old debt, and threatens to have you "blacklisted" if you fail to pay, know this - it's an empty threat.
Credit Information Ombudsman Manie van Schalkwyk considers a debt to have prescribed if the person has not acknowledged the debt in the previous three years - and debt collectors may not list a prescribed debt with a credit bureau.