The Limitations Act of 1980 sets a time limit of 6 years on most debts; after this period expires, creditors are no longer allowed to chase the debt. However, in certain circumstances, a creditor may still be able to recover it, even after this timeline has elapsed.
To avoid being unable to pay a debt that is no longer in the court’s jurisdiction, it’s important to understand when debts are statute-barred and what that means. Read on to find out more.
Understanding Statute-Barred Debts and the Limitation Act 1980
It is possible that you will not need to settle a debt if it has reached statute-barred status. The Limitation Act 1980, or Statute of Limitations, states the amount of time creditors may pursue collection of the debt. Not all debts are eligible for statute-barred status.
However, it is still important to pay a debt for which you have been issued a CCJ (County Court Judgement) during the limitations period. This timeframe is based on the type of debt you owe and who issued it to you.
Work out when the limitation period for the debt begins by getting the most recent date from any of the following sources: when you, or a third party, acknowledged that you owe the debt; when your last payment was made towards it; or the default period stated in the loan terms and conditions.
When communicating, make sure to declare that you do not owe the debt, and keep a record of all conversations. Note: if the creditor begins court action, the debt cannot become statute-barred.
Determining Whether You Must Pay a Debt After Six Years
Determine whether you must pay the debt in question by looking at the length of time since you last made a payment on it. Check to see if six years have elapsed since you had any interaction with the creditor.
Additionally, there may be special circumstances that mean you do not have to pay the debt in full. These may include instances where you signed under pressure, the terms of the agreement were unclear at the time, or the debt was not yours.
It is important to note that after six years, certain unsecured debts can no longer be enforced. These debts include credit cards, catalogue payments, payday loans, personal loans, and overdrafts, provided you have not paid or acknowledged them in that period.
After this time, a County Court Judgement (CCJ) may still force you to pay the debt.
Debts and Statute-Barred Limits
Loans that are secured, such as mortgages, can be pursued for up to twelve years. Additionally, there are certain other debts that may be pursued indefinitely. These include money owed to HMRC such as income tax, VAT, and capital gains tax, as well as any benefits overpayments that must be paid to the Department of Work and Pensions.
Having a debt older than 6 years that has become statute-barred does not confirm that it is cancelled. The debt will still be visible on your credit file, which can cause difficulties when you try to get credit.
Furthermore, the creditors can still require you to pay the debt. However, they are unable to legally pressure you to make payment for the debt.
Verify all communiques regarding the debt to enable you to decide whether the debt is now outside the statute of limitations. The conditions must be met: A CCJ from the creditor concerning the debt has not been issued, the debt has not been acknowledged in written form for at least six years, and you have not paid off the debt for five years.
Dealing with Statute-Barred Debt: Advice and Assistance
Once you have indicated to the creditor or debt collection agency that you are questioning the debt because you consider it to be statute-barred, it is their responsibility to counter that opinion. Do not hesitate to ask for proof if they tell you a payment has been made or a notice has been received.
Many creditors will persist in chasing a debt that is statute-barred, so it is a good idea to check if this is the case. You can do this by reviewing your credit file and also notifying your creditor that enforcement is no longer an option.
Doing so can help you avoid getting a CCJ if the creditors take you to court, and can save you from debt collectors’ harassment if you have proof that the debt is statute-barred. Be sure to maintain proof of any correspondence you have with the creditor, and make sure you are certain the debt is statute-barred before you write to them.
Don’t confront debt and despair in silence. There is professional help available, and debt advisors are ready to provide invaluable assistance. From fending off debt collectors to determining if a debt is statute-barred to preventing further accumulation of debt, these advisors are ready to help you address your financial hardship.
Conclusion
The limitation period for debt chasing in the UK is set out in the Limitation Act 1980, with the majority of unsecured debts becoming statute-barred after 6 years. However, there are a few exceptions, with secured loan debts, debts owed to HMRC, and benefits overpayments being among those that may have longer limitation periods.
It is important to understand your rights when it comes to debt and to take the necessary steps to ensure that debtor is not harassed by creditors past the limitation period. If you need help, there are many debt advisors and services that can help you manage and negotiate with creditors, so don’t hesitate to seek the assistance you need to handle your debt with peace of mind.
