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.

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.

You can read more about statute barred debts on our website.

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.

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Tags Collection Process Debt
  • sean howlett

    Hi,

    Hope someone can please advise. had a call from a company called Global Debt Recovery reference to an account myself and my ex-wife had and was closed by the Bank of Lloyds in 1996 as no payments were made, they have also added a £245 interest for an account they closed. All i have asked for is a letter to be sent to me to confirm payments if i want to pay is this legal or can i fight against the payment?

    • moneyaware

      Hi there Sean, thanks for posting.

      As this debt is very old and you haven’t made a payment in this time, it may fall under the criteria for a statute barred debt, as outlined under the Limitations Act. A creditor has six years from the last payment made to establish a payment plan with you or take the debt to county court. If they don’t manage to do this within the six year timeframe, the debt is no longer enforceable. It’s still outstanding, and you do still technically owe the money. It may even still show up on your credit file. All the Limitations Act does is prevent action after the allowed six year timeframe.

      If this debt hasn’t yet been taken to county court, and there’s no history of payments on the debt from you or your partner, then it might be a good idea to follow the procedure in the blogpost above. As long as the letter you previously sent did not in any way state that you were ever liable for this debt, you may still be able to send the statute barred letter this blogpost links to. Once this is sent, if the creditor can’t produce proof of the debt, the last payment made, or that a County court judgment was granted, they should stop contacting you. If they do contact you again without proof of the debt, you can then escalate your complaint to the Financial Ombudsman.

      I hope this helps

      Kind regards

      Rachel

  • Kelly

    Hi, I was wondering if anyone can help. My partner has received a CCJ off a company called Cabot financial, who were chasing a debt off 14 years ago can he contest it with it being so old.

    • moneyaware

      Hi Kelly,

      If the debt fits the criteria listed in the article above, it may be statute barred.

      If a creditor starts court action after the limitation period has passed, the fact that the debt has become statute-barred or extinguished gives you a defence.

      If court action has already started and you’ve received a CCJ, you may be able to get this cancelled later, but this can be difficult and there may extra court fees to pay.

      Filling in court forms for a statute-barred or extinguished debt can be more complicated than normal, and there’s a possibility you may need to attend a hearing if the court needs more information. If you come to us for advice, our debt advisors should be able to offer you support with this.

      You can find out more about filling in CCJ claims forms here:

      https://www.stepchange.org/debt-info/ccj/court-claim-form-process.aspx

      You can find out how to get in touch with us here:

      https://www.stepchange.org/Contactus.aspx

      I hope this helps,

      Jen

      • Kelly

        Thank you for your advice, we’ll look into it.

  • Tee Reynolds

    Hi hoping you can advise me I took a phone contract out for my son (bad move )about 11 years ago he was paying it monthly but then lost his job so payments stopped and I was then left with the outstanding bill Lowell Finance they have been constantly sending me letters I know I should have paid it but at the time I was unemployed and has a lot going on with family issues I did move home and they are still constantly sending me letters demanding the debt of 625.69 even offering to pay 375.41 and I clear the remaining!!
    This debt is pretty old am I in the category for stutus barred if so I will download the letter and send it to them 😠

    • moneyaware

      Hi Tee,

      Thanks for getting in touch.

      If the debt meets the criteria above it may be statute barred.
      We have more information about statute barred debt on our website here:

      https://www.stepchange.org/debt-info/can-i-write-off-debt/statute-barred-debt.aspx

      If you think the debt is statute barred it’ll be up to the creditor to prove otherwise.

      If the debt isn’t statute barred and you’re worried about the impact paying it off will have on your finances, please
      feel free to give our Helpline a call for advice. Our advisors can offer free and impartial advice on how to deal with it.

      You can find out how to get in touch with us here:

      https://www.stepchange.org/Contactus.aspx

      I hope this helps,

      Jen

  • Tee Reynolds

    Hi hoping you can advise me I took a phone contract out for my son (bad move )about 11 years ago he was paying it monthly but then lost his job so payments stopped and I was then left with the outstanding bill Lowell Finance they have been constantly sending me letters I know I should have paid it but at the time I was unemployed and has a lot going on with family issues I did move home and they are still constantly sending me letters demanding the debt of 625.69 even offering to pay 375.41 and I clear the remaining!!
    This debt is pretty old am I in the category for stutus barred if so I will download the letter and send it to them 😠

    • moneyaware

      Hi Tee,

      Apologies about the delay in replying.

      It’s hard to know for sure, but if you’ve not made a payment or acknowledged the debt in writing in the last six years then it’s possible the debt is statute barred.

      You can use the template letter above and if the debt isn’t statute barred the company will provide you with evidence to prove why the debt is still enforceable.

      Kind regards

      James

  • Karl

    Just got a letter from Cabot saying that I owe 94 euros!! I cancelled the direct debit from 3G Ireland broadband and they didn’t sent me any letter. Can I prosecute 3G for disclosure of my data to a third party???

    • moneyaware

      Hi there,

      It sounds like this question relates to consumer contracts in Ireland, which I’m afraid I don’t know very much about. I know in the UK it’s fairly standard for debts to be passed to a third party for debt collection but I don’t know how things work in Ireland. It may be worth checking the small print on your original contract to see if there’s anything about passing your information to other organisations.

      Kind regards

      James

  • roberto

    A company called Capequest has sent a letter that was claming that i owe £ 8k and he was passed the debt on from another debt collection agency. I have actually a debt of similar amount that i have a plan in place to pay back and i thought this was now passed on to Capequest. I therefore registered on their website to work a plan for payment but i realised that this about a debt which goes back in 2005 and for which a never made any payment. my question is : does registering on their website and try to workout a plan means admitting the debt? I never confirmed anything in writing and nor made any payment.

    • moneyaware

      Hi Roberto,

      It’s very unlikely that this would mean that you’d be admitting the debt as it’s usually written acknowledgement or payments towards a debt that do this.

      It’s also important to know that once a debt become statute barred, it can’t become ‘un-barred’ if you make a payment or even acknowledge the debt after 6 years has passed. So if you’re certain that the debt is statute barred then this shouldn’t have any impact on you.

      I hope this helps,

      Rory

  • Toni

    So I recently logged on to my clear score account to see my short and long term debt were £0 and my score is stable and ready to rebuild. What does this mean? I had around £10k in debts from current accounts, credit card, store card and pay day loans. I have ignored any letters and not acknowledged anything for the last 6 years or slightly more I honestly don’t remember. I am not proud of this I will add, I have just never been in a position to pay anything until now, hence the reason I logged on. Where has my debts gone?? Am I now in a position to start again and hopefully get a mortgage one day ???

    • moneyaware

      Hi Toni,

      Information will usually only appear on your credit file for 6 years, after which it ‘drops off’ your report. This doesn’t mean debts are written off though, and the rules around statute barred debts aren’t linked with what shows on your credit file.

      If you’re ever unsure about whether the information on your report is accurate or you have questions, the best place to find information is with the credit reference agency themselves.

      I hope this helps,

      Rory

  • Lexie Star

    tricky, yeah?

  • Kirstie Mac

    I have been receiving letters from capquest re my old student loan. I have not made any payment toward this EVER as it was deferred (i left college in 1996!)
    Is this likely to be a barred debt or are the rules different? I am in Scotland
    Many thanks

    • moneyaware

      Hi Kirstie,

      If your student loan was an ‘old style’ (pre 1998) loan, these are covered by the Limitation Act which governs statute barred debts, and a six year limitation period applies (5 years in Scotland)

      However, if you’ve applied for deferment, this counts as a written acknowledgement of the debt, which is one of the reasons that can prevent a debt from becoming statute barred, as in the article above.

      So whether the debt has become statute barred depends on whether you’ve deferred payments and whether the creditor has taken any further action against you to recover the money.

      I hope this helps,

      Rory