21/06/2008 17:04 - (SA)
When old debts come back to haunt you
Nhlanhla Ncaca
DEBTS are subject to prescription or “extinction”, but in many cases debt collectors continue to claim debts long after the prescription period has lapsed.
Debt prescription is not a complete defence when it comes to failing to settle your arrears.
A case in point involves a woman who complained to Hotline that debt collectors acting on behalf of the Edcon Group were demanding payment of an account she had failed to settle years ago.
Suzan Sekete opened an Edgars account in 1994. She purchased goods from the clothing retailer but failed to settle her account.
She made her last payment in July 1995 but still owed the retailer. She could not remember how much the outstanding balance was on her account. Sekete applied for a home loan six years later, but the application was declined because of a default judgment against her name with a credit bureau.
She later discovered that the credit bureau listing had been removed and assumed her Edgars debt had been prescribed.
“I struggled for a long time to obtain credit from other service providers and I lived with that. But I recently received numerous calls from debt collectors who demanded a payment of R6 038 to settle the Edgars account.
“As far as I understand, that debt should have long been prescribed. I hope Hotline will help me with answers,” she said.
Sekete said she had told Munnik Basson Dagama Attorneys that she would pay.
But she later changed her mind when the debt collectors allegedly refused to issue her with a statement reflecting the debt.
The debt collectors stopped calling for a while. When the calls resumed, Sekete decided to contact Hotline.
Hotline referred her complaint to Edcon financial services executive Ian Wood.
Wood confirmed that Sekete had failed to settle her account and that Edcon had instructed Munnik Basson Dagama Attorneys to recover the debt. Edcon initially instructed another debt-collection company, VeriCred, to claim the outstanding debt but the agency failed to recover the money owed to Edgars.
Wood said there was no credit bureau default listing against Sekete regarding the Edgars account. He said the credit bureau data-retention period had expired.
But he stressed that Sekete was still indebted to Edgars and that she should not ignore calls from debt collectors.
The National Credit Regulator advised Sekete to approach the Council for Debt Collectors, Legal Aid Board or Consumer Affairs Office to challenge the validity of the Edcon claim.
National Credit Regulator legal adviser Nceba Mafongosi said the prescription of debt was governed by the terms and conditions of the agreement that the parties had entered into or the Prescription Act of 1969.
He said a debtor could use the prescription as a defence if she or he could prove that the creditor had not done anything to pursue the debt for three years. Mafongosi said the National Credit Regulator had no provisions that dealt with the prescription of debt.
Follow these guidelines when contacted by a debt collector:
Request a statement from the creditor and determine the date the account went into default.
After three years from this date, and provided the creditor did not obtain a judgment, the creditor or collection company cannot list a default on your record.
If you suspect a default has been re-listed or the debt is prescribed, query the listing with the credit bureau concerned.
Contact the Council for Debt Collectors, Legal Aid Board or Consumer Affairs Court if you are not happy with their response.
The Prescription Act provides four different basic prescription periods which are 30, 15, six and three years respectively.
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