Prescribed debt dispute letter (template)

Use this template carefully. Do not change it into an admission that you owe the money. Replace each [PLACEHOLDER].

[YOUR FULL NAME]
[YOUR ADDRESS]
[YOUR EMAIL]  |  [YOUR PHONE]

[DATE]

[CREDITOR OR DEBT COLLECTOR NAME]
[THEIR EMAIL OR ADDRESS]

RE: Reference [REFERENCE THEY USED] - dispute: this debt has prescribed

Dear Sir / Madam,

I refer to your demand dated [DATE OF THEIR LETTER / CALL] regarding an alleged
debt of R[AMOUNT THEY CLAIM].

I dispute that this debt is enforceable. To the best of my knowledge:
  - I have not made any payment toward this alleged debt since [APPROX DATE,
    MORE THAN 3 YEARS AGO];
  - I have not acknowledged this alleged debt in writing or otherwise during
    that period; and
  - no judgment has been granted against me, and no summons or other process claiming payment has been served on me, in respect of it.

Under the Prescription Act, this debt has therefore prescribed and is
unenforceable. I do not acknowledge liability for it, and nothing in this letter
should be read as an acknowledgement of the debt or a willingness to pay it. If this debt arose under a credit agreement covered by the National Credit Act, section 126B of that Act also prohibits you from selling it, continuing to collect it or re-activating it now that I have raised prescription.

I accordingly request that you:
  1. cease all collection activity and contact regarding this matter;
  2. confirm in writing that you will not pursue this prescribed debt; and
  3. remove or correct any adverse listing relating to it at the credit bureaus.

If you believe the debt has not prescribed, please provide written proof of the
last date of payment or acknowledgement and of any judgment, so the position can
be assessed.

Yours faithfully,

[YOUR FULL NAME]

Under the Prescription Act, most ordinary unsecured debts - things like personal loans, store accounts, credit cards and overdrafts - prescribe three years after they became due, provided three conditions all hold. You must not have paid anything toward the debt in those three years, you must not have acknowledged it (in writing, by promising to pay, or by part-payment), and the creditor must not have obtained judgment against you.

Some debts take longer to prescribe. Debts secured by a mortgage bond, judgment debts, tax debts and certain mining royalty debts owed to the State prescribe after thirty years, certain debts owed to the State for advances of money or land sales or leases after fifteen years, and debts arising from negotiable instruments or notarial contracts after six years, not three. So a home loan or a debt where the creditor already got a court judgment does not simply disappear after three years. When in doubt about which rule applies, get advice before relying on prescription.

The single most damaging thing you can do is to acknowledge a possibly-prescribed debt. Acknowledgement includes making any payment, agreeing a payment plan, signing an acknowledgement of debt, or even saying "I will sort it out" in writing. Any of these, made while the three years are still running, interrupts prescription so the three years start again (Prescription Act, section 14).

Collectors know this, which is why they may push for a small "good faith" payment or a quick verbal arrangement. Decline politely, deal with them only in writing, and use the dispute letter above. The whole strategy depends on you raising prescription without ever admitting you owe the money.

• Paying anything. Even R50 "to make them stop" can count as an acknowledgement that restarts the three years, or muddy your position if the debt has already prescribed.
• Acknowledging the debt by phone. Collectors record calls. Keep everything in writing.
• Assuming every old debt has prescribed. A debt with a judgment, or a bond, has not. Check the type of debt and whether anything interrupted prescription, such as a payment, an acknowledgement or a summons served on you.
• Doing nothing. Prescription is a defence you must raise. If you ignore a summons, a creditor can still get judgment, and a judgment debt does not prescribe for thirty years.

If a collector keeps demanding payment on a debt you have properly disputed as prescribed, you can complain to the NCR ([email protected], 0860 627 627), because section 126B of the National Credit Act prohibits continuing to collect a prescribed credit agreement debt once you raise prescription. The National Financial Ombud, which began on 1 March 2024, is a free alternative for participating credit providers. If they list it on your credit profile, send a credit bureau dispute letter with a copy of your prescription dispute.

If you receive a summons, do not ignore it. Prescription must be raised as a defence in the legal process, so respond within the time stated, ideally with an attorney, and plead prescription. A debt that you allow to go to default judgment becomes a judgment debt, which prescribes only after thirty years - the opposite of the outcome you want.