Prescribed debt in South Africa: how long a lender has to collect

What prescribed debt means

A debt prescribes when the creditor waits too long to enforce it. Under the Prescription Act 68 of 1969, the debt is then extinguished (section 10(1)), and any debt that hangs on it, such as interest, goes with it (section 10(2)). For a lender, a written-off book is on a clock. Every month an account sits untouched brings it closer to the day it is worth nothing.

Two rules shape what happens next. A court will not raise prescription by itself: the debtor has to plead it (section 17). And a payment made after a debt has prescribed still counts as payment of a debt, so the debtor cannot claim it back (section 10(3)). For credit agreements, the National Credit Act adds a stricter rule, covered below.

How long before a debt prescribes: the section 11 periods

Most micro loans, payroll loans, cash loans, store accounts and unpaid invoices fall in the three-year group. Two longer periods are within a lender's reach. A court judgment gives 30 years. And an acknowledgement of debt written as an unconditional, signed promise to pay fixed instalments from a fixed date was held to be a promissory note, with six years, by the Free State High Court in [2026] ZAFSHC 322 (Cash Converters case).

When the clock starts

Prescription starts to run as soon as the debt is due (section 12(1)). A loan repayable in one amount is due on its repayment date. With instalments, each instalment is due on its own date, and the whole balance is due once the agreement makes it payable, for example when you call up the full amount after default.

A debt is not treated as due until the creditor knows who the debtor is and the facts the debt arises from, or could have known them with reasonable care (section 12(3)). If the debtor deliberately hides the debt, the clock starts only when the creditor finds out (section 12(2)). A lender usually knows its borrower, so these rules rarely move the start date. They can matter where a loan was taken out under a false identity.

In practice, date each account from its last payment or acknowledgement, because each one restarts the period. In [2016] ZASCA 206 (Absa Bank case, paragraph 4) the Supreme Court of Appeal recorded that the debts prescribed on 8 July 2014, three years after the last payment on 8 July 2011.

What interrupts prescription

• Acknowledgement of liability (section 14). Any express or tacit acknowledgement by the debtor interrupts the clock. Express: a signed acknowledgement of debt, or an email or WhatsApp in which the customer admits owing the money. Tacit: conduct that shows the debtor accepts the debt, and a part payment is the common example. A full new period runs from that day. If the parties also move the due date, for example with a payment plan, the new period runs from the date the debt falls due again (section 14(2)).
• Service of process (section 15). A summons interrupts prescription when it is served on the debtor, not when it is issued. Process includes a notice of motion, a counterclaim and any document that starts legal proceedings (section 15(6)). The interruption falls away if you do not take the claim to final judgment, or you abandon the judgment, or it is set aside, unless the debtor acknowledged liability (section 15(2)). Once you have judgment, a new 30-year period runs from the day the judgment becomes executable (section 15(4)).

A letter of demand, an SMS, a phone call or a section 129 notice does not interrupt prescription. Only the debtor's acknowledgement, or process served on the debtor, does.

What delays completion (section 13)

Section 13 does not stop the clock, but it stops the period from ending while certain impediments exist. If the period would end before, on, or within a year after the day the impediment ends, prescription completes only one year after that day (section 13(1)(i)). The impediments most relevant to lenders:

• the debtor is outside the Republic (13(1)(b));
• the creditor or the debtor has died and no executor has been appointed yet (13(1)(h));
• the debt is the subject of a claim filed against a deceased or insolvent estate, or against a company in liquidation (13(1)(g));
• the creditor is a company or other juristic person and the debtor is a member of its governing body, such as a director (13(1)(e));
• the debt is the subject of a dispute referred to arbitration (13(1)(f));
• the creditor is prevented by superior force, including a law or a court order, from serving process (13(1)(a)).

Example: a customer's last payment was on 1 March 2023, so the debt would prescribe on 1 March 2026. He was working in Botswana from 2025 and came back on 1 October 2026. Prescription cannot complete before 1 October 2027. Keep proof of the absence, because you will have to show it.

Prescribed debt under the National Credit Act: section 126B

Section 126B of the National Credit Act 34 of 2005 was inserted by section 31 of the National Credit Amendment Act 19 of 2014 and has applied since 13 March 2015. For a debt under a credit agreement to which the Act applies, it sets two rules:

• No sale. No person may sell the debt once it has been extinguished by prescription (section 126B(1)(a)).
• No further collection or re-activation. No person may continue to collect the debt, or re-activate it, where it has prescribed and the consumer raises prescription, or would reasonably have raised it had the consumer known about the defence, in response to a demand, in court or otherwise (section 126B(1)(b)).

The second rule closes the old route of getting a small payment or a fresh acknowledgement on a dead account. Before 13 March 2015, an agreement that revived a prescribed debt was valid, and the Supreme Court of Appeal held in the Absa Bank case that section 126B does not reach back to undo agreements signed before it came into force. After 13 March 2015, a consumer who paid or signed without knowing about prescription can still raise it, and the lender must then stop. A payment already received can be kept (Prescription Act section 10(3)), but it does not revive the debt or restart the clock.

Treat a prescribed credit-agreement account as closed: do not sell it, do not keep demanding payment, and do not ask for a new acknowledgement.

What a lender should do now

1. Date every account. Record the last payment and the last acknowledgement on each account, with the document that proves it: the bank statement line, the signed acknowledgement of debt, the email.
2. Work out each prescription date. Add the right section 11 period, usually three years, and flag every account that prescribes in the next six months.
3. Work the oldest first. An account 30 months past its last payment has six months left; one at 10 months has 26. Spend effort where the clock is shortest.
4. Get written acknowledgements. A signed acknowledgement of debt restarts the three years and fixes the amount. A customer who pays R200 also restarts it, but a signed document is easier to prove.
5. Sue in time where the balance justifies it. For a credit agreement, deliver the section 129 notice first. You may go to court only once the consumer has been in default for at least 20 business days and 10 business days have passed since the notice (National Credit Act section 130(1)). The summons must then be served before the prescription date. For an account last paid on 15 May 2024, start the notice by February 2027, not in May 2027.
6. Close prescribed credit-agreement accounts. Stop collection and keep them out of any book sale.

If the book is large, a free book audit is a quick way to sort accounts by age; Planar offers one and contacts no customer while doing it.

Questions people ask