And still they’re chasing accumulated old debts…
Not because I think people should shirk their commitment to settle their debts.
I just don’t think it’s fair for someone to be contacted out of the blue by a collector who has bought an old, written-off debt, then added years worth of interest and costs and is now making a big demand
In the past, thanks to the quirky Prescription Act, it wasn’t illegal for a collector to try to get someone to pay a prescribed debt, which is a debt which has been dormant for more than three years – no payment or acknowledgement by the debtor in that time, and no summons issued (with the exception of home loan and state-related debts which only prescribe after 30 years).
If the debtor didn’t know about debt prescription and didn’t raise the “P” word as a get-out-of-debt-jail card, and agreed or promised to pay the money, it was game over, and they were forced to pay the old debt, plus all the add-on amounts.
So clearly, it wasn’t in the massive debt collecting industry’s interests for consumers to know about prescription, and they made millions from those who didn’t.
Which is why I was so excited about that section of the National Credit Amendment Act (NCAA) because it protects all debtors from paying prescribed debt, not just those who know about it.
No demands for prescribed debt should be made any more; end of story.
But, no, the demands have continued.
When I questioned a firm of attorneys about its demanding payment of an allegedly prescribed debt, one of its attorneys responded with this: “We have spent a considerable amount of time and resources researching the application of the NCAA (pertaining to prescription) and also obtained independent legal opinion in this regard. It is vastly more complicated than is considered by the popular media.
“You are welcome to schedule a consultation if you wish to discuss this aspect more in depth, as attempting to communicate the scope of our research and our findings in an email will be impractical.”
Obstruction at is most haughty, especially as their offices are 600km from mine.
A source at the Credit Ombud’s office says the wording of the amendment is open to interpretation, and the one which the collectors are relying on is this: that a prescribed debt can’t be collected “where the consumer raises the defence of prescription, or would reasonably have raised the defence of prescription had the consumer been aware of such a defence, in response to a demand…”
The argument goes that “it follows that this additional protection does not extend to a consumer who was aware of; alternatively was made aware of the defence of prescription”.
“So where the credit provider can prove that the consumer was aware of the existence of the defence, or was made aware of the defence of prescription and did not raise the defence of prescription, the re-activation and continued collection of prescribed debts is not prohibited.”
So the upshot is that many collectors are still sending those demands for prescribed debt, with the addition of a paragraph or two about prescribed debt. Or an SMS will refer the alleged debtor to the collector’s website in order to read up on prescribed debt.
And if the person doesn’t bother to get clued up, and goes on to agree to pay, or make a payment, well, they lose their prescription defence – on this interpretation.
But the National Credit Regulator disagrees with that interpretation.
“Whether the consumer knows about the prescription defence or not, the debt has prescribed and there should be no collection or re-activation of it,” a spokesman said. And any collector using it in order to attempt to collect prescribed debt is “circumventing the application of this provision... and misleading consumers”, he said.
It’s high time this amendment and it’s interpretations were tested in a court of law.
According to food price monitor the Pietermaritzburg Agency for Community Social Action, for every R100 in a middle income household, 77% goes towards servicing debt, leaving very little for food, education and transport.
How much of that money is servicing very old, inflated debt when it could be educating or feeding a child, I wonder?