What Section 126B Protects:
Section 126B prohibits creditors from selling, continuing to collect, or reactivating debts under credit agreements that have been extinguished by prescription under the Prescription Act.
This applies when:
- The debt has prescribed (usually after 3 years of no payment or acknowledgment)
- You raise the prescription defense, OR you would reasonably have raised it if you had known about it
Key Points:
Prescription periods:
- Most consumer debts (credit cards, personal loans, unsecured debt) prescribe after 3 years
- Debts secured by mortgage bonds and court judgments prescribe after 30 years
Important to note:
- Prescription doesn’t automatically erase the debt. It only removes the creditor’s legal right to sue you for repayment.
- The debt can still remain on your credit report for one year following the prescription date, impacting your ability to obtain credit.
Always ask for proof: This advice is solid. You should request the original signed agreement and a recent statement showing the date of your last payment or acknowledgment to verify the debt is still active
A warning to proceed with care
- You can restart the clock - Any acknowledgment of the debt (making a payment, promising to pay, signing an acknowledgment) restarts the 3-year period.
- Section 126B was introduced to stop abusive practices where creditors tricked unaware consumers into making payments on prescribed debts to reactivate them.
- Prescription doesn't automatically erase the debt - it removes the creditor's legal right to sue you for repayment.
Always verify debt age before paying old debts, as you may have legal protection.
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