So what is zombie debt you may ask? Let’s say your phone rings and the collection agent on the other end tells you that you have not paid your debt???
You have no idea what debt he or she is talking about, but their going at you full blast about a 6 year old cellphone account, but you can’t even remember having taken out this mysterious contract that their holding you accountable for? The debt collector on the other end says: “Just pay R100.00 that’s all we’re asking for” DONT!!!
Ladies & gentleman welcome to what it internationally known as “zombie debt”, and as most people ask me: “can old debt come back to haunt me from the grave?”
If you’ve ever watched a zombie movie, The Walking Dead or Z Nation T.V. series, then you know all about zombies. These “back from the dead” creatures are nearly impossible to kill, let alone get rid of, and continue to haunt you despite your best efforts to get rid of them. Shooting them doesn’t work; hacking their limbs off doesn’t work, heck even blowing them up only “sometimes” works. Zombie debt or “prescribed debt” as it’s known in South Africa is sort of like that.
Can debt collectors contact you years after you last had dealings with a credit provider and demand that you pay some alleged debt? Yes, they unfortunately can and they do!
The Prescription Act is intended to give consumers some form of protection against debt collectors hounding us to pay very old, very inflated debt amounts which we can barely recall, it at all.
But it does not stop debt collectors from “chasing” prescribed debts regardless of the laws saying otherwise, as debt collecting is an extremely lucrative industry in South Africa these days.
It is up to the consumer to know about the Act of Prescription and raise this as a defence in the face of a demand for payment from a debt collector. If they don’t, their considered fair game by the collectors. If ever there was a case to prove knowledge is power, this would be the best justification for it.
How do you know if a debt has prescribed?
Prescribed debt can best be explained as old debt that has not been serviced over a period of three years.
More specifically, a debt is considered prescribed if in the past three years (36 months), you have not done the following:
- You have not owned up to owing the money in any way, or agreed to pay it in the past three consecutive years, either in writing or verbally (telephonically),
- You have not made any payments towards settling the debt, promised to make a payment to the outstanding debt amount,
- You have not been Summonsed by court, received a Judgement or had an Emoluments Attachment Order administered to your salary in respect of it to make a payment by a creditor, for the debt within the past three consecutive years
If all fall within the parameters of this criteria the debt has prescribed, and you can raise this as a defence when asked to pay such a debt by the collection agent.
What type of debt does prescription relate to?
The following are examples of types of debt which can become prescribed if the correct rules are followed:
- Retail accounts
- Credit card accounts
- Telkom accounts
- Personal Loans / Pay day Loans
- Gym memberships
- Cellular accounts
- Monies owed on vehicle finance
Not all debt prescribes in three years. A 30 year prescription period relates to;
- A home loan
- Municipal accounts
- Monies owed to SARS
- Your TV License
What does this mean for you as a consumer?
the straight up answer is everyone accountable to pay off their debt. It is wrong not to pay it off; you did make the debt at the end of the day. “However”, it is also wrong for a debt collector or credit provider to demand payment, many years later after you have defaulted on the account. They are held accountable for not performing their due diligence when the account became an issue.
If your debt has prescribed;
It has not been serviced for three of more years; a debt collector cannot now ask you to pay off your debt. In terms of the Act of Prescription it is considered against the law, if they try to get you to do so.
Be aware that The National Credit Amendment Act, published 13 March 2015, prohibits the sale and collection of Prescribed Debt. This means if a debt collection firm contacts you to settle an prescribed account they bought from a credit provider, it is illegal.
Unless the debt collector or credit provider can prove that your debt is not indeed prescribed, tell them to stop harassing you and leave you alone. We advised that you also put this in writing, send an email even, so that there is recorded proof thereof.
If they continue to contact you regardless, request them to provide you with the original loan agreement/contract, proof of the default, a statement baring the outstanding amount and interest accrued over that period. This should stop the debt collector from harassing you and will prove if they even had a legitimate claim to begin with.
If your debt has not prescribed;
If you have acknowledged your outstanding debt within a period of three years (36 months), or have made a payment upon the account, your debt remains valid and you are held accountable for paying it off.
If you are finding yourself in this situation and unsure as to how to proceed
TALK TO US!!!
WE CAN HELP!!!
With over 11 years of specialized experience in the debt & legal field Oyisa United Debt Specialists is committed to assisting South African consumers in financial liberation.