How long does a debt last? … Legal prescription in South Africa
11 May 2017

– Summary

Legal Prescription is a legal principle that sets out how long someone has to collect a debt. Here we discuss how prescription effects you.

Legal Prescription dictates that … Debt does not last forever.

Our law places limits on the amount of time a creditor has to collect the debt due to them from a debtor.

Legal Prescription (or simply “prescription”) is governed by The Prescription Act 68 of 1969, and the Act covers several kinds of debt, some of which appear in the below table (generally the most relevant to the average person is the following section: All other debt.

Debt

Time before prescription

Judgement; Mortgage Bonds; Tax-related debt

30 Years

Debt owed to the State

15 Years

Debt relating to cheques and other negotiable instruments

6 Years

All other debt

3 Years

How to calculate when legal prescription starts running

As important as knowing what prescription period applies to your situation, is knowing how to calculate when the prescription starts running.

According to the Prescription Act, prescription begins to run as soon as the debt is due; however, if a debtor intentionally prevents a creditor from becoming aware of the debt, the prescription will not commence until that creditor becomes aware.

The operation of legal prescription can be interrupted or delayed

There are several ways prescription can be interrupted (i.e. the time for prescription to expire can be longer than the times mentioned in the table above).

Interruption of prescription may, depending on the circumstances, either “pause” prescription or cause the prescription period to start over again.

Kind of Interruption Explanation

Interruption by acknowledgement of liability

If a debtor expressly or tacitly acknowledges their liability, prescription of the whole debt is interrupted. 

If prescription is interrupted in this manner, the running of the prescription period will begin from the beginning and it will run from the day the interruption occurred.

By way of some example, acknowledgements of liability can include:

  • Admitting of liability in writing or verbally.
  • Part-payment of the debt or interest.
  • Giving of security.

Interruption by Judicial operation

Formal service of the legal process will interrupt prescription; legal process includes a Summons; Notice of Motion; rule nisi, etc. 

However, only the aspects for that part of the original cause of action are interrupted; if the creditor wishes to add a new cause of action, prescription of the said new cause of action will not have been interrupted.

Once the legal process has been served, the matter will be dealt with in terms of the Rules of Court and can therefore extend beyond the limits of prescription.

In certain circumstances, the prescription period will be delayed, such as … if the creditor is a minor, insane, or under curatorship; if the debtor is outside the country; the executor of a deceased estate has not yet been appointed; if the creditor and the debtor are married to each other; if the creditor and the debtor are partners and the debt arose from a partnership agreement; if the issue is submitted to arbitration; etc.

Reasons that prescription of debt exists

Prescription creates legal certainty and it can potentially protect a debtor against old claims for which he/she may not have records or witnesses anymore.

Conclusion

The application of prescription can adversely affect a creditor and can be a useful tool in defence for a debtor.  Whether you are a creditor or a debtor, it is very important to bear prescription in mind when engaging in any transaction.

DISCLAIMER: THERE ARE MORE CONSIDERATIONS THAN WE CAN COVER IN THIS ARTICLE SO ONLY USE THIS INFORMATION AS A GUIDE.   THIS INFORMATION DOES NOT CONSTITUTE LEGAL ADVICE.  IT IS ALWAYS BEST TO DISCUSS YOUR SITUATION WITH AN ATTORNEY; CONTACT US AT 0861 88 88 35helpdesk@gcm-legal.com AND THROUGH THE CONTACT FORM ON THIS PAGE.

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