Prescription of Debt: When Old Debts Die — and When They Don't

Debts do not live forever. South African law sets time limits within which a creditor must enforce a claim, and once that period runs out the debt is extinguished by what lawyers call extinctive prescription. For creditors, prescription is a deadline that quietly destroys good claims; for debtors, it is a complete defence that many people pay away without realising they had it. Whether you are chasing payment or being chased, the rules in the Prescription Act 68 of 1969 matter — and so does a newer layer of protection for consumers under the National Credit Act.

What prescription is

Extinctive prescription is the extinguishing of a debt through the passage of time. The policy behind it is simple: claims should be pursued while evidence is fresh and witnesses available, and debtors should not live indefinitely under the shadow of stale claims. Once a debt has prescribed, the creditor can no longer enforce it in court. One important procedural point: a court will not raise prescription on a party's behalf — the debtor must raise it as a defence. That is precisely why debtors need to know the rules, and why some collectors historically pursued old debts hoping no one would object.

The prescription periods

Section 11 of the Prescription Act sets out four categories, unless another Act provides otherwise:

• Thirty years for debts secured by a mortgage bond, judgment debts, debts in respect of certain taxation, and certain debts owed to the State in respect of minerals and mining.
• Fifteen years for certain debts owed to the State arising from a loan of money or the sale or lease of land.
• Six years for debts arising from a bill of exchange or other negotiable instrument, or from a notarial contract.
• Three years for every other debt — the general rule that covers most everyday claims: invoices for goods and services, loans between individuals, credit card and store account debt, professional fees and damages claims.

Two of the longer periods deserve emphasis. A debt secured by a mortgage bond prescribes only after 30 years, which is why a bank can enforce a home loan long after an unsecured loan would have died. And once a creditor takes judgment, the judgment debt itself prescribes only after 30 years — a powerful reason for creditors to sue in time and for debtors to take a summons seriously.

When the clock starts running

Under section 12 of the Act, prescription generally begins to run as soon as the debt is due — that is, when it is immediately claimable. The Act builds in fairness on both sides. If the debtor deliberately prevents the creditor from finding out about the debt, prescription only starts once the creditor becomes aware of it. And a debt is not regarded as due until the creditor knows the identity of the debtor and the facts from which the debt arises — although a creditor is treated as knowing what they could have discovered by exercising reasonable care. Creditors cannot sit on their hands and plead ignorance.

Interruption: restarting the clock

Prescription can be interrupted, in which case it starts running afresh. The Act recognises two forms of interruption:

• Acknowledgment of liability (section 14). If the debtor acknowledges liability — expressly or by conduct, such as making a part payment or signing an acknowledgment of debt — prescription is interrupted and begins to run anew from the acknowledgment.
• Judicial interruption (section 15). Service on the debtor of any process by which the creditor claims payment — typically a summons — interrupts prescription.

What does not interrupt prescription is just as important. Telephone calls, emails, statements and letters of demand from the creditor do not stop the clock. A creditor who spends two and a half years sending increasingly stern letters is still on course to lose the claim in month thirty-six. Debtors, conversely, should be careful about what they sign or promise: a casual "I'll pay you next month" in response to a demand can amount to an acknowledgment that resets the entire period.

Delay: when completion is postponed

Separately from interruption, section 13 of the Act delays the completion of prescription in defined circumstances — for example where the creditor is a minor, is insane or is under curatorship, where the debtor is outside the Republic, or where the creditor and debtor are married to each other. In such cases prescription does not complete until a year after the impediment has fallen away. This protects people who are practically unable to enforce their rights from losing them in the meantime.

Prescribed debt and the National Credit Act

For debts arising from credit agreements, consumers enjoy an additional statutory shield. Section 126B of the National Credit Act 34 of 2005, inserted by the National Credit Amendment Act 19 of 2014, prohibits any person from selling a prescribed debt under a credit agreement, and from continuing to collect or re-activating such a debt where the defence of prescription is raised — or would reasonably have been raised had the consumer been aware of it. In plain terms: a collector may not trade in or pursue prescribed consumer credit debt, and may not exploit the consumer's ignorance of prescription. This closed the door on the once-common industry practice of buying books of ancient debt for cents in the rand and pressuring consumers into "reviving" them.

A note of caution for debtors, however: the Prescription Act provides that payment of a debt after it has prescribed is treated as valid payment of the debt — you cannot pay first and reclaim later. Before paying anything on an old debt, establish the dates, whether prescription was ever interrupted, and whether the debt falls under the National Credit Act.

What this means in practice

• Creditors: diarise every claim against the three-year rule; issue and serve summons — or obtain a signed acknowledgment of debt — before the period expires. Our commercial law and debt collection practice runs these timelines as a matter of course.
• Debtors: before paying or promising anything on an old account, check when the debt became due, whether you ever acknowledged it, and whether a summons was actually served on you.
• Both: judgment changes everything — a 3-year claim becomes a 30-year judgment debt.

Prescription disputes turn on dates, documents and sometimes a single signature. If you are unsure where a debt stands, contact us before you act — on either side of the ledger.