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!).
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.
Legal Hero.
Legal Hero endeavours to not only provide quality legal assistance
at an affordable monthly premium, but also legal education, so that everyone,
in time, may become their own hero.
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