Statute Barred Debt

Have you got a debt that your creditor has not taken action on to recover yet?

Your debt could potentially be statute-barred.

Continue reading to find out what a statute-barred debt actually means and what you can do about it.

What is statute-barred debt?

When your creditor has taken a long time to take action for recovering a debt (known as passing the limitation period) the debt will be known as being statute-barred.

When your debt is statute-barred, the debt can not be recovered through a county court judgment or other court action.

Although the debt does technically still exist, it has been written off when the debt is statute-barred.

After this limitation period has passed, your creditor is legally not allowed to force you to repay as you are not responsible for the debt anymore.

What types of debts become statute-barred?

There are many different types of statute-barred debt types, it is beneficial to note which specific debt is statute-barred.

If you are confused about whether your debt can officially be listed as statute-barred, here is a record of different debts:

  • Store cards
  • Personal loans
  • Council tax arrears
  • Payday loans
  • Benefit overpayments
  • Rent arrears
  • Gas and electrical arrears

What types of debts will not become statute-barred?

If your outstanding debt is not one of the listed above, there is a chance your debt might not be statute-barred.

Here is a record of debts that will not become statute-barred after six years:

  • Mortgage shortfalls- mortgage shortfall debt has a longer two-pronged limitation act (lasting 12 years).
  • Debts attached to a CCJ- When court action has begun to take place to obtain a county court judgement- it can never be a statute-barred debt.
  • Personal injury claims- The limitation period for a personal injury claim is a shorter 3 years.
  • Debts to HM Revenue and Customs- Income tax, VAT, and Capital gains tax will not have a limitation period at all.

How does statute-barred debt work?

Understanding how statute-barred debt actually works is really simple!

When your creditor has not successfully pursued your debt for six years or more, they will typically not be desperate for the money you owe. It would be unfair if a creditor attempted to have you pay after not pursuing your payments a number of times.

There is a six year limitation period for all unsecured debts. When this limitation act has passed, the creditor will have absolutely no legal obligation to enforce your payments.

The statute-barred debt will be visible on your credit report.

How long before a debt is statute-barred?

When does the limitation period pass in the UK?

There are a variety of lengths for the limitation period depending on your location.

In Scotland, absolutely no debt is statute-barred as they just use the term ‘prescribed’. The limitation period for a prescribed debt in Scotland also differs to five years.

The normal amount of time for when a debt is statute-barred is a six-year limitation period.

How do I know the limitation period has passed definitely?

If you have not been contacted by your creditor/s in the limitation period you will not need to do anything. On the other hand, if you’re certain that your debt is statute-barred and your creditor/s are contacting you, you should write to them to ask them to stop contacting you.

It can be very difficult to remember exactly when your payments started or how much you actually owe, looking at our ‘how to find out how much debt I have’ article can help you with this!

How do I know that my debt has become statute-barred?

There have been no payments towards the debt.

For your debt to become statute-barred, you must not have paid anything towards the amount.

Actively paying towards the creditor or debt collection agency will not allow your debt to become statute-barred. If you haven’t made a payment in the past six years of having the debt, then you can qualify and your debt is statute-barred.

The creditor has no written proof of the debt.

When a creditor has absolutely no documentation to state that you have a specific debt, the creditor cannot take further court action with a county court judgement.

The debt can not be pursued without any written proof of the debt.

The creditor has not initiated any court action for chasing the debt.

Normally, a county court judgment (CCJ) will be brought into the picture when you owe money to a creditor.

Court action, specifically a county court judgment, will be put into place when the debt is being chased.

The creditors can attempt to take court action straight away, however, they will usually pass the debt to debt collectors from a reputable debt collection agency. After the collector has received no debt repayments, CCJs will take place.

The creditor’s cause of action lands outside the limitation period.

After the limitation period has been exceeded, the creditor can no longer attempt to pursue the debt repayments- you will not owe money to the debt collector or creditor.

Where can I find more information on statute-barred debts?

While you’re in debt, it can be an incredibly stressful experience. Whether the creditors or debt collectors are hassling you or if you haven’t heard from them in a long while, it is definitely a worry.

You can contact a debt charity today to reach the support you might need when learning about your statute-barred debt.