What happens to debt after 3 years in South Africa?
So, first things first, what is prescribed debt? Basically, prescribed debt in South Africa is old debts that haven't been recognised or paid for a certain period, typically three years. Once this debt is considered 'prescribed', the law prohibits debt collectors from chasing it.
South Africa has different laws which specify prescription periods, for example, the Prescription Act says that contractual and delictual debts extinguish after three years from the date when it became payable (due). Prescription periods may, in certain circ*mstances, be delayed or interrupted.
A prescribed debt is, to put it simply, an obligation that has essentially "expired." Usually, debt is said to have been prescribed when after three years have passed and the creditor or debt collector has not filed any legal action or requested payment of the outstanding balance.
Moving abroad does not wipe your debts or relieve you of the obligation to settle the debts you left behind. Furthermore, moving overseas does not mean that your creditors will stop hounding you for payment. As long as the debt you owe remains, you will be liable in South Africa.
The debt is regarded as a separate account once it is in the possession of a collection agency. If you don't pay, the collection agency may file a lawsuit. Depending on how the case turns out, the court may seize your property or garnish your income to recover the money you owe.
The number of years it takes for debt to become prescribed varies depending on the type of debt. For personal loans, credit cards, retail accounts, and vehicle loans, the timeframe is three years. Therefore, debt older than 5 years in South Africa is, most of the time, no longer collectable.
Don't stop paying your debt after leaving South Africa
Your actions may not affect your ability to travel, but some debt will haunt you. For instance, if you owe the South African Revenue Services, your assets can be attached, and if you have assets outside South Africa, they may be repatriated to SA.
- Prescribed Debt. Debt has only prescribed if there has been no attempt by the credit provider to collect it or if no summons has been issued for the debt during the last 3 years. ...
- Reckless Lending. ...
- A quick note about Credit Amnesty.
The Amendment Act will provide additional protection to low-income consumers from over-indebtedness by either re-arranging, suspending or extinguishing (partially or wholly) their unsecured credit debts during a period of four years from the commencement date, which can be extended.
- Know why you want to do this. ...
- Pay more than the minimum amount due. ...
- Use an accelerated payment strategy. ...
- Grow your income. ...
- Adjust your lifestyle. ...
- Sell what you don't need. ...
- Consolidate or switch for a better interest rate.
Is South Africa in a debt trap?
More and more South Africans are feeling the pressures of credit, with escalating fiscal pressure making it difficult for many to keep on top of payments. This is seen by debt for South Africans currently sitting in R2. 31 trillion, with R142.
The only time a warrant for your arrest will be issued is if you committed a crime or if you did not appear in court when you were summoned to appear, and the court issued a warrant for your arrest for contempt of court. You cannot be arrested for not paying your debt.
Until you have formally (or financially) emigrated, your status will be as a South African tax resident temporarily abroad, and you will not be permitted to withdraw your South African retirement funds out of the country.
How long do you stay blacklisted? In South Africa, negative information can remain on an individual's credit report for up to five years, which means that a person can potentially stay blacklisted for this duration.
Your missed payment will be reflected on credit bureaus and your credit score will likely decrease. If you have an Access Bond facility on your Home Loan, revolving personal loan or credit card, these facilities may be cancelled.
You may go and report this matter to the police but they will probably tell you it is a civil matter and they can't handle it. Unless the matter also involves violence or an immediate threat there is really not much that the police can do for you if someone owes you money on a loan.
A debt collector is not allowed to:
Serve any false legal documents. Present themselves as police officers, sheriffs or officers of the court. Spread, or threaten to spread, any false information about your creditworthiness. Charge more than the fees set down by the Council.
Most negative items should automatically fall off your credit reports seven years from the date of your first missed payment, at which point your credit score may start rising. But if you are otherwise using credit responsibly, your score may rebound to its starting point within three months to six years.
A judgment is public information and remains on your credit report for 5 years or until the judgment is rescinded by a court or paid in full. Once paid Consumers no longer have to get the judgment rescinded in court. What is a rescinded judgment?
Your debts don't disappear and you still have an obligation to repay them. However, if your move abroad is genuine, just make sure to be communicative with your credit card issuer and/or debt collectors.
What is considered a lot of debt in South Africa?
As a rule of thumb, a debt-to-income ratio of 36% is considered high. While a ratio of 43% is considered too much debt. Here are a few tell-tale signs that your debts have risen beyond your control: At least half of your income is spent on consumer debt (credit cards, medical bills, personal loans).
Technically, nothing happens to your debt when you leave the country. It's still your debt, and your creditors and collectors will continue trying to get you to pay it back. Just as they would before, those efforts may include phone calls and letters.
The South African government has implemented a credit information amnesty from April 1, 2014. The amnesty will give all consumers a fresh start with a clean credit record. The amnesty effectively instructs credit bureaus to remove adverse credit information about you from their files.
How long does debt review stay on your name? 'Debt review' stays on your name until you complete the debt review process, get your clearance certificate and are declared debt-free. This usually takes between 36-60 months, but it can be even faster. After the process, the debt review status is permanently removed.
Most states or jurisdictions have statutes of limitations between three and six years for debts, but some may be longer. This may also vary depending, for instance, on the: Type of debt. State where you live.
