Many in SA unfairly paying up on prescribed debt

THE debt collecting industry was dealt a savage blow last March when it became illegal for companies to attempt to get someone pay a debt which had prescribed.

In a nutshell, a debt prescribes if, in the previous three years, the debtor has made a payment, acknowledged the debt in any way, or received a court summons connected to it.*

Until last March, collectors had a legal right to “chase” prescribed debts – if a debtor didn’t know about the protection of prescription, and promised to pay when confronted with a collector’s payment demand, or made a payment, they unwittingly forfeited their prescription defence, and had to pay up, including years of interest and fees.

But as I’ve reported in this column before, the industry continues to hound consumers to pay old, bloated, prescribed debts.

The debts have in most cases been written off by the credit provider and then sold for a song to a debt collector which justifies attempting to get debtors to pay it, despite it being prescribed, by relying on a self-serving “loophole” interpretation of the National Credit Amendment Act.

Sedicka Williams of Wynberg raised the defence of prescription herself, and was then told the debt hadn’t prescribed, because she’d made a recent payment, which was news to her.

When she first contacted me in June, she’d just received a summons relating to her FNB credit card debt dating back to 2009. She went under debt review that year, but lost her job at the end of 2010, and that’s when she had to cancel the debt review process, and repayments to FNB and her other creditors stopped in early 2011.

“FNB have never tried to collect from me since then,” Williams told me.

“Then in April this year I received an SMS from national debt collection lawyers Groenewald Lubbe Inc (GLA) of Randburg demanding payment, which I ignored.” In June GLA sent her a summons obtained in the Wynberg Magistrate’s Court, dated May 27, demanding immediate payment of the original debt of R16 300, plus fees and commission, bringing the total to R30 700.

“Does this qualify as a prescribed debt?” Williams asked. “What do I do now?” I advised her to respond with a request for an extension to file an appearance to defend on the grounds that the debt had long prescribed.

An e-mail exchange between me and the credit ombud’s office led to FNB getting involved, and some weeks later the bank informed Williams that, in fact, her debt had not prescribed because she’d made a payment in settlement of the credit card debt in December 2014 – which means it hadn’t been three years since her last payment when that summons was served.

The bank’s e-mail read: “The last payment received directly from the complainant was on the 17 December 2014. We attach copies of the attorney statements from 2009 to 2016”.

And there in the statements was the alleged “direct payment” from Williams. This left her stunned. “I have requested FNB numerous times to issue me with proof of how that payment was allegedly made, but nobody can tell me where the deposit came from,” she said.

She continued to get SMSes from GLA, threatening to obtain judgment against her and attach her assets.

I then put it to FNB that given how much rested on Williams’ alleged payment of December 2014, more information around that payment needed to be provided. “How was the payment made? Cash, an EFT? From which account?”

Head of collections at FNB Credit Card, Jonathan De Deer, told me: “A previous payment by Ms Williams was not timeously allocated to her account, due to insufficient payment information provided by the customer, so the bank was able to trace and allocate this payment.

“As a result of the delay in allocating the payment, it appeared on the account that Ms Williams had made a payment in 2014 whereas this was in fact the date of the payment allocation.”

And then they told Williams that “the bank has agreed to immediately withdraw the summons as the debt has prescribed.”

Bear in mind that Williams says her last payment was in early 2011. So the bank is now claiming that the payment was somehow – and for no particular reason – found almost four years later and then allocated to her account, which was by then in the hands of GLA.

Williams continued to get threatening SMSes from GLA, including one last week which read: “Your FNB Credit Card account refers. Judgment has been granted. The sheriff may be instructed to attach movable assets that belong to you. Urgently call GL Inc.”

Back to FNB I went. Turns out the “judgment has been granted” claim wasn’t a lie, it was a mistake.

“We can confirm that the account has been closed and the attorneys were notified on the 29th August 2016,” I was told. “We enquired about the text message - the attorneys have confirmed that this was generated in error and they will apologise to the customer”.

On her own, Williams would most certainly not have been able to get justice, and would be saddled with that R30 000 debt. And I’m left with the awful knowledge that many others are paying old, bloated debts to collectors because they didn’t ask the right questions and/or couldn’t get the right answers.

To use a Consumer Protection Act term, it’s unconscionable.

*Home loan and state-related debt, including TV licence debt, only prescribes after 30 years.

CONTACT WENDY: E-mail: Twitter: