Statute barred debt: A step-by-step guide

posted by in Collection Process, Debt

What counts as credit?

Can Statute Barred debt be written off?

We never encourage people to avoid paying their debts. You won’t hear us making false claims about “getting your debts written off”. That’s what daytime TV advert breaks are for.

We’re here to give the expert debt help and practical solutions people need to get back in control of their finances.

That being said, we’re here for you. And as my old school teacher use to say (a lot), “knowledge is power”. I want you to be armed with everything you need to get debt free and stay there. That’s why I want you to know about statute barred debt.

Update: Read more about statute barred debt on our website.

What is statute barred debt?

Statute barred debt refers to a debt that’s not enforceable because the time a creditor has to chase payment has passed. This is outlined under the Limitation Act 1980.

The act is not a way for people to avoid paying debts. If your debt is not statute barred there’s no way to use the Limitations Act to avoid paying it. But non-enforceable debts are sometimes pursued by debt collection companies when they shouldn’t be, so it helps to know where you stand.

How long can a creditor chase a debt for?

Under the Limitation Act 1980 a creditor has six years to chase most unsecured unpaid debts, or twelve years for some mortgage shortfalls. This ‘limitation period’ starts from the time of your last payment or acknowledgement of the debt, not the total length of time you’ve been making payments. If a court judgment (CCJ) has been registered against you before the limitation period has passed it can be enforced at any point. There is no limitations period for a CCJ.

For Scottish debts the rules are different as statute barred debts cease to exist (and creditors aren’t allowed to ask you for payment) after five years, unless the court has issued a Decree before the five year limitation period.

The Limitation Act doesn’t apply to debts owed to the Crown such as income tax. Because the act prevents court action, some debts such as benefits overpayments and Council Tax sometimes use different collection methods that don’t involve the court, which means the debt can be collected even after six years have passed.

When can the Limitations Act 1980 be used?

The act states that when ALL of the following conditions are met a debt cannot be enforced:

  • The creditor has not registered a County Court judgment (CCJ) against you
  • You (or with joint debts, you and the other person) have not made a payment in the last six or twelve years
  • You have not admitted the debt in writing in the last six or twelve years

What does ‘not enforceable’ actually mean?

If a debt is statute barred it isn’t ‘written off’ and it doesn’t disappear. If a debt is not enforceable it means that if a creditor tries to take you to court, you’ll be able to defend the case and you won’t get a CCJ. Creditors aren’t allowed to keep chasing a debt that is statute barred if they haven’t been in touch with you at all during the six year limitation period, but they can keep asking you for payments if they’ve been in regular contact. If you’ve changed address without telling the creditor or not opened the letters, this doesn’t mean that creditors haven’t tried to contact you.

Some creditors, such as the DWP (Department for Work and Pensions), have legal powers which allow them to take money from wages or benefits without going to court. They can still do this even if the limitation period has passed.

What to do if you think your debt is statute barred

The thing with a statute barred debt is that the burden of proof is with the creditor to prove you do have to pay it, not for you to prove you don’t. If a creditor has contacted you and you definitely know the debt is statute barred you should write to the creditor to tell them.

Template letter for statute barred debt

Here is the statute barred template letter (PDF) you can send. just add your name, address and the creditor’s details at the top. It doesn’t have to be exactly the same as this if you’d prefer to write your own.

Here’s what to do if you think your debt is statute barred:

  1. First of all you should get a copy of your credit file. You can do this for free at Noddle
  2. Write to the creditor contacting you (using the template letter above). Send the letter recorded delivery from the Post Office so you can prove they received it
  3. Be aware that if the full six or twelve year period has not passed, if you make a payment the limitations period would start again from that point
  4. If they continue to chase you without sending proof complain to the Financial Ombudsman who will take up your complaint. Don’t go to the Ombudsman first as they’ll bounce back your complaint
  5. If they do send proof and you’re liable don’t feel pressured to pay more than you can afford. Use our confidential online debt advice tool, for a free budget assessment and personal action plan explaining exactly how to deal with your debts

Of course just because a debt is statute barred, it doesn’t mean you can’t pay it off. If you know you owe the money you may want to pay it back. As they’re non-priority debts creditors are only entitled to payments you can manage and we can help you work out the quickest way to pay the debt back.

We get lots of comments on this post, so if your question hasn’t already been answered in the article, have a read through some of the many questions we’ve answered for other people.

Save

Save

Save

Tags Collection Process Debt
  • mike watterson

    I agreed a deal with a Sporting body (The World Professional Billiards and Snooker Association) in 1986 September. I fulfilled my part of the bargain immediately. I received written confirmation of the deal from the association, but they never made the payment of £5,000 which was their part of the deal. I have repeatedly asked them over the years to honour their payment without any success. I was unable to sue them because I was a playing member of that association, and would have been thrown out. I was told by them recently that the S.of Limitations says that they no longer owe the debt. What can I do ?.

    • moneyaware

      Hi Mike,

      The Limitations Act, as described in the article means that no further action can be taken to try and recover certain types of debts after a period of 6 years or more. In your case, it’s difficult to offer an answer as there may be other factors involved and our advice in this area is limited.

      If the debt does fall under the Limitations Act, then it may not be possible for you to take any further action to recover the debt.

      Kind regards

      Rory

      • mike watterson

        Thank you for your reply.
        The problem would need to be explained to you in detail, and would take 30 minutes for you to understand fully as the detail is all important. I paid for and was expecting a telephone call, which sadly I have not received. There is fine detail involved, as I was the person that built Snooker from nothing in the late `70s and early `80s, and have been kicked in the teeth ever since. That is a matter of history. You can look me up on Google.

      • moneyaware

        Hi Mike,

        With any answers we give, these are based on what information is provided to us in your question. Our advice on the legalities of debts or disputing an amount owed is also limited, so you may need further legal advice in your situation, which is beyond the advice we can give.

        Kind regards

        Rory

  • Darren

    Hi there
    Back in 2007 i had taken a loan out with a company to help pay for few things moving into new home, i made the first few repayments and then lost my job i sent a letter and contacted them regarding this. And was told that when i get back into work to start making payments again, however i since havent paid any of the loan back as i completely forgot about this only for me to check my credit file and see it on there. What happens now what can i do as i dont recall on receiving letters for at least 6 or 7 years regarding the debt?
    Is there anything i can do to have it removed from my credit file ?? Would i need contact them to arrange payments.. thanks

    • moneyaware

      Hi Darren,

      It may be that this debt is statute barred. The above article should give you the information you need to check this.

      The timescale for a debt becoming statute barred isn’t related to information held on your credit file, so it’s possible that a debt may be statute barred but information still exists for the account on your credit file.

      However, it may be worth making sure any information on your credit file is accurate. If dates are incorrect or information is wrong then you could contact the credit reference agency and ask them to correct it.

      If the information on your credit file is accurate and the dates are correct then it’s likely to be very hard to remove it other than waiting for it to drop off. Information on your credit history usually lasts for a maximum for six years, so it might be that it’s due to go away soon anyway.

      Kind regards

      James

  • Jo Hamlett

    My husband has had a letter from AIC on behalf of Arrow Global claiming he owes £900 plus. We have very good reason to believe this is over six years old so I have sent the statute barred letter. However this also doesn’t appear on his credit file. If they are able to request payment of this debt should it also appear on his credit file?

  • Maria

    Hi

    My situation is a bit different because it does not involve a company. Essentially a person I lived with for a short while in March 2006 is chasing me for half of the rent that was paid on the tenancy in 2006/07. He paid 12 months rent up from together with the deposit when we took out the tenancy agreement as I could not afford too. He never suggested at the time that I would need to repay anything to him at any time. The relationship didnt last and I moved out after about 6 weeks. He has never been in touch with me about this, not once until Saturday and now he is asking if I am in a position to repay him the 6 months rent that I promised to all those years ago. I am not sure if I need to go to a solicitor now or wait for him to send me the solicitors letter he is promising.

    I never agreed to repay him anything, he didnt ask. Do you think this fits into the 6 year rule?

    FYI he was in touch with me last year but didnt mention this and that didnt end well, he is not a very nice person.