Financial fitness

Know your consumer rights

Ever heard of prescribed debt? Just for the record, prescription of debt means a debt that is expunged after a period of time.

According to the Prescription Act 68 of 1969, a debt is prescribed if, during the past three years:

• The consumer did not admit to owing on the debt, either verbally or in writing.

• The consumer did not not make payment towards the outstanding amount.

• The lender has not taken legal action against the consumer.

According to Credit Ombud Nicky Lala Mohan, the lender may not institute legal action against the consumer for the debt if one of these three points is involved.

Mohan said that not all debt can be prescribed after three years. Retail, credit cards, Telkom, personal loans, gym contracts, cellphone, electricity accounts due to the municipality and school fees prescribe after three years.

But debt relating to home loans, monies due to the South African Revenue Service, rates and taxes due to the municipality and TV licenses prescribe after 30 years.

Section 126B (1) (b) of the National Credit Amendment Act prohibits the collection of and the sale of prescribed debt.

“Consumers can now find themselves free from debt that has expired, provided that they don’t interrupt prescription by acknowledging the debt or making payment towards the debt after the three years has lapsed,” said Mohan.

He added that in some instances consumers unwittingly interrupt prescription by acknowledging the debt or making a minimal payment towards the debt.

Mohan said consumers who were contacted for debts that have prescribed can contact the office of the Credit Ombud for free assistance.

The Credit Ombud can also assist with issues relating to credit agreements with non-bank credit providers such as the clothing and furniture retailers as well as microlenders, fraudulent listings, emolument attachment orders (garnishee orders) or general complaints about their credit bureaux listings.

Mohan urged consumers to arm themselves with information and learn more about their rights.

He said almost 10 million credit active consumers are struggling to repay their debts and would rather avoid the problem than face the debt music. One of the main reasons for consumers to hide away from debt is due to a lack of knowledge.

“Consumers have no clue what their rights are, what to complain about and where to complain,” added Moha.

The office can be contacted on 0861 66 28 37 or by email at ombud@creditombud.org.za. The website address is www.creditombud.org.za