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September 01, 2016

When a debt prescribes (lapses)

You may have been on the receiving end of a threat from a debt collector or law firm, demanding that you pay a debt, which goes back years.

The Prescription Act provides that the basic period of prescription is 30 years in respect of any ‘judgement of debt’ and 3 years for any ‘other debt’.

The effect is that in the case of any other debt, where no payment has been made for a period of 3 years, the debt has ‘prescribed’. This means that the debt has been completely extinguished and does not have to be paid.

Prescription is interrupted by the issue of summons (before the three years are up) or by any express or tacit acknowledgement of liability by the debtor (such as a payment of any amount towards the debt, within the three years).

So some advice: if a debt collector calls or writes to you to claim payment of a debt that is older than 3 years (and you have not paid anything in the past three years, or admitted liability in that time, or the creditor hasn’t sued you) claim prescription and refuse to pay.