Credit Act changes affect prescribed debt
AMENDMENTS to the National Credit Act, gazetted on Friday, will have a significant effect on the way prescribed debt is collected.
This is according to Debt-Busters chief executive Ian Wason.
The Prescription Act stipulates that a debt is prescribed if you have not acknowledged it in three consecutive years, either in writing or verbally. You should also not have made any payment towards this outstanding amount, nor should you have promised to pay. The creditor should also then not have summoned you for this debt within three consecutive years.
With the draft amendments released in 2014, Wason said it caused a debt collections spike as debt collectors became aware that selling and collecting prescribed debts would soon be prohibited.
“Debt-enforcement agents resorted to tactics such as harassing consumers, the fraudulent use of emolument orders forcing employees to make deductions off employees’ salaries, confiscating borrowers’ bank cards, identity documents and PIN codes to withdraw cash from accounts themselves, all in order to collect debts that have expired under the Prescription Act,” he said.
Unscrupulous collectors sometimes used devious methods to get consumers to acknowledge their prescribed debt either verbally or in writing. This interrupted the prescription and placed consumers in a position where they were obliged to pay back their debt.
“We have seen a drastic increase in the amount of debt counselling applications over this period of time, as cashstrapped consumers, threatened by unscrupulous collectors, have turned to us for help,” says Wason.
But now that the selling and the collection of prescribed debts resulting from credit agreements are prohibited by The National Credit Act it brings relief to consumers as prescribed debt can no longer be collected by anyone.
Wason said consumers who received calls from credit providers or debt collectors for old debt must know their rights. Those being harassed should turn to a reputable debt counsellor for help.