Did my debt prescribe?

When your car is repossessed it has a major impact on your life.

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Article courtesy of Fin 24

A Fin24 reader wants to know how prescribed debt works after she got a surprising call from attorneys demanding payment for the shortfall of her car that was repossessed 7 years ago. She writes:My car was repossessed 7 years back. Now attorneys are demanding payment for the shortfall. I would like to if the prescribed debt argument applies here. The attorneys claim that it doesn’t because I was already sued when the bank took the car. What can I do?

Debt Rescue’s legal department manager, Lerien van der Merwe, responds:

There can be different scenarios to answer this question depending on the situation at the time that the vehicle was repossessed.

In terms of the Prescription Act any subsidiary debt will prescribe if the principle debt prescribes.  The opposite is then indeed also true.

You therefore first need to establish if the principle debt would have prescribed, and if so, the subsidiary debt would also have prescribed.

Prescription is interrupted in the following ways, and if interrupted the prescription period starts to run afresh from the date that the relevant action takes place –

1. Acknowledgement of liability: Acknowledgement of the debt can be either express meaning it can be by way of admitting the debt and/or making arrangements for payment, or it can be tacit meaning that it is understood without being stated; or
2. Judicial interruption: Judicial interruption takes place when the credit provider takes the necessary legal steps to claim payment on the account.  It is important to note that the interruption period shall lapse if the credit provider does not successfully process his claim to final judgment, unless the consumer acknowledges the debt.

It is indicated that the vehicle was repossessed; however, it is not clear if this was done after judgment or if it was surrendered voluntarily before a judgment was obtained.

If no judgment was obtained, and the debt was not acknowledged, the interruption of the prescription period would have lapsed.  In this instance the debt would indeed have prescribed after three years.

Some might argue that the voluntary surrender of a vehicle can be seen as tacit acknowledgment, but this is a matter for a court to decide.

If the credit provider proceeded to final judgment, the prescription period for both the principle and subsidiary debt would have been interrupted and it will run afresh for a 30 year period from the date that the judgment debt became due. In this instance the debt did not prescribe and remains due and payable.

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