Prescription – debts have expiry dates too
Similar to the sell by dates found on your milk carton, debts have expiry dates too! This is for legal certainty and to protect debtors against old and inflated debts.
A creditor only has 3 years’ time to institute legal action against a debtor (since the last date of payment/ acknowledgment of debt). After the 3 year period the debtor may raise the special defence of prescription in court.
To avoid the debt’s ‘expiry date’ the creditor needs to:
a) convince the debtor to acknowledge the debt or make a payment towards the debt (this will cause the 3 year period to start running afresh) OR
b) take the matter to court before the ‘expiry date’ to request a judgment against the debtor (as a judgment debt is binding/ lasts for 30 years!).
We often see creditors take advantage of the debtor’s ignorance and demand immediate payment when in actual fact the debtor is able to raise the special defence of prescription in court. Technically only a court can confirm your special defence of prescription, however, most creditors will stop calling/ sending legal letters once you have correctly pointed out prescription. Should the creditors still decide to take you to court, remember to ask for a cost order against them (meaning that they should be held liable for your legal fees should your defence succeed).
Very important is that the defence of prescription is not something the magistrate/judge will bring up in court on behalf of the debtor. If you are unaware of this special defence, chances are you will end up with a court judgment against your name.
Please note that debts owed to the State in terms of taxation and/or levies are different and only prescribe in 30 years’ time (without the State having to go to court to obtain judgment against you). This means that the State has a full 30 years to claim from you debts resulting from municipal bills, TV licences and traffic fines.
Knowledge is power.
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