Paying Off Older Debts
Some of The Worlds Oldest Debts
Did you know that if you default on a credit agreement then the credit provider can go to court and ask the court for a judgement which will be in force for 30 years? This means that over the next 30 years the credit provider has the right to charge you interest on the debt (until you pay it off) and that they are allowed to collect on the debt. If a credit provider doesn’t bother to take legal action against someone who is not paying a debt for 36 months then the debt may prescribe and they may lose the right to collect the debt (see below).
6 of The Wolrd’s Really Old Debts
If you think you have old debts, what about some of these really old debts which are still being paid today:
Briain’s 4% Consols
In 2014, the UK government announced plans to pay off a huge chunk of old debt that they have owed since the early 18th century (and before). The debts were from what are called ‘perpetual bonds‘ left over from the “Four Percent Consolidated Loan,” which UK Prime Minister Winston Churchill had issued in 1927 to refinance national war bonds from the first World War.
Though that happened in 1927, these debts actually contained a bunch of older smaller debts lumped together from the Napoleonic and Crimean Wars, as well as, a loan from 1847 (to help Ireland during the Great Famine), and even money paid to compensate slaveholders when Britain abolished slavery in 1835. The oldest part of the debt was from the 1720 government bailout following the South Sea Bubble (which happened because of financial panic caused by runaway stock speculation in Britain’s South Sea Company.
As of 2014, there were still over 11,000 bondholders collecting interest on these really old debts.
USA Civil War Pension
The US Civil War ended way back in 1865 but one old American lady is still collecting a government pension for her father’s service in the Union Army. You might wonder how she could be alive never mind collecting the pension. Well, Irene Triplett is the daughter of Private Mose Triplett (a North Carolina farmer) who served in the army during the American civil war.” Pvt. Triplett survived the war and later married a younger woman…a much younger woman. In fact, she was around 50 years younger than him. [You Go, Private Tripplett!]. They got married in the 1920’s. He was 83 years old when his daughter (Irene) was born in 1930. He died a few years later. His daughter is now 87 years old and lives in a nursing home in North Carolina. Irene still collects a pension of $73.13 each month, as compensation for her father’s war time service.
From 1919 till 2010
World War 1 officially ended in 1919 with the Treaty of Versailles. At the end of the war, Germany had to pay reparations as part of the “War Guilt Clause” in the peace deal. Germany had to compensate the Allies (who won) 132 billion gold marks—that’s about over $400 billion today. Because Germany defaulted a number of times eventually private bonds were issued to help settle the debt. The bonds still had to be repaid. Adolf Hitler cut off payments during his rise to fame but after his death, the debt reappeared and was still due. In the 1950s, West Germany agreed to start paying off the bonds again. this remained the case until the 1990s when the Berlin wall fell and the country was reunited. Now both parts of the country could carry on paying off the debt. The last debt repayment was done in 2010 in the amount of $94 million. This means it took over 90 years to pay off the debt.
The Dutch Never Forget and They Always Pay
It seems the Dutch and the Lanisters have something in common. They never forget and they always pay their debts. In the 17th Century, to raise money to fix a dyke and help construct some river piers, securities were issued (in 1624 and 1648). The Dutch water authority called Hoogheemraadschap Lekdijk Bovendams was involved. One of these really old bond documents is written on goatskin. The bonds were, once again, a type of bond called a perpetual bond. The securities caught the eye of Yale University in 2003, who bought the 1648 perpetual bond for $25 000. They bought the 368-year-old bond not for it’s value but for its historical value, but since it was issued with no maturity date, it still pays out interest to this day. Back in 2015, a Yale professor travelled all the way to Holland to collect 12 years worth of interest which amounted to a whopping…wait for it…$153.
Revoltingly Old Debt
In 1791 slaves on the Caribbean island of Saint Domingue began a violent revolt that eventually led to the establishment of the Republic of Haiti. When the French later sent a fleet to blockade the island Republic, the Haitian government eventually agreed to pay France an indemnity of 90 million gold francs to cover the property losses to French colonists and slaveholders. Their independence came at a cost. The debt was finally paid off after more than 120 years in 1947.
French Lawyers – Beware
For over 280 years the French government has been paying the family of a lawyer an annual pension. Back in 1738, a French lawyer (Claude Linotte) acted as a financial advisor to the Duke of Bouillon and his children. As compensation for his services, Mr Linotte persuaded the Duke to give him and his family a perpetual life annuity of 1,000 French livres each year which would stay in effect until ‘the date of death of the last survivor among the descendants of Mr. and Mrs. Linotte.’ His family have been around ever since and have collected on their debt through the French Revolution, the rise and fall of Napoleon, as well as, both World Wars. The pension is still active today even though the amount it pays out is, in relative terms, tiny, coming in at just $1.25 per year. Even though it is such a small debt the family refuse to let it go and diligently collect it each year.
‘The good news is that, in South Africa, the law helps consumers avoid debt which lasts forever’
Prescribed Debt
Credit providers want to be paid and they hate to let old debts go unpaid. The good news is that, in South Africa, the law helps consumers avoid debt which lasts forever. We even have laws that prevent an unpaid debt from growing and growing without limit – laws like In Duplum and NCA Section 103(5). We also have something called prescription of debt. If you have a debt which has, not been sent to court and which you have not paid or acknowledged for 3 years then the debt may have “prescribed“. This means the debt is dead and can no longer be enforced. This encourages credit providers to be active in collecting debt and making use of the courts to obtain judgements where consumers are not paying. If the creditor doesn’t think it is worth going to court over then the debt will fall away and become prescribed.
‘This means the debt is dead and can no longer be enforced’
If you have a debt which you think may have prescribed contact your local Debt Counsellor and ask them how prescription works.