What is prescription? Does a debt have a lifespan? Is it possible for a debt to die a wonderful death so I can get on with my life? When does an unpaid debt rest in peace? Can it revive/ literally wake from the dead to come haunt me again?
A legal expert answers below.
Prescription means the extinguishing of a vested claim usually quantified in monetary terms, after the lapse of a definite period. In South Africa, prescription is regulated under the Prescription Act, 68 of 1969.
A debt, contractual debts or delictual claim prescribes after 3 years of uninterrupted non-claim by the creditor. This effectively means, the 3 years must be uninterruptedand not cumulative. The creditor must not have taken any step to recover the debt from the debtor for an uninterrupted period of 3 years or more. If Bank Well borrows money to Mr Lender and, from the date when Mr Lender is supposed to pay back the money in full or in instalments till the lapse of 3 years, the debt will prescribe unless Bank Well takes any step in order to recover the money from Mr Lender. This step can be a telephone call, letter of demand, summons, visit or text message.
Delictual claims also prescribe after a period of 3 years. When you suffer loss due to the delictual conduct of another party, you have 3 years in which to claim damages for such loss. Due to an accident which occurs as a result of the negligent driving of Mr Wrong, Mr Right suffers damages to his motor vehicle in the amount of R6 000. From the date of the accident, Mr Right has 3 years in which to claim damages from Mr Wrong. If however, Mr Right does not take any step in claiming compensation from Mr Wrong for the damages to his vehicle for an uninterrupted period of 3 years, the claim against Mr Wrong will prescribe and Mr Wrong will not be legally required to compensate for the damages.
Prescription starts to run from the time when payment is due. This then means that as long as payment is not due, prescription will not start to run. For example, if the agreement between Bank Well and Mr Lender is that Mr Lender will be given money in June but his repayment will start in November, prescription will start to run from November.
Will prescription run if the creditor is not aware of the existence of the debt? Absolutely not. Prescription will only start to run when a creditor becomes aware of the existence of a debt. For example, A goes to B’s house to borrow some money only to find that B is not at home. B’s wife, C, knowing that A and B are good friends, takes money from B’s safe box and gives it to A who undertakes to give it back when he gets paid. In this scenario, prescription of this debt will start to run when B becomes aware that A borrowed his money, and A should repay it back. It follows that B can only be expected by law to ought to have claimed his money back from A, if, he knew that A had borrowed money.
A debt secured by a mortgage bond, a judgment debt, a debt for tax, a debt owed to the state for profits relating to substances (such as mine minerals) prescribe however after 30 years.
The effect of a debt/claim prescribing is crippling for the creditor and a relief to the debtor. The advantage of knowing how prescription affects your claim as a creditor or debtor is indeed invaluable.