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.

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Tags Collection Process Debt
  • BB

    I, like so many others, bought a summer home in Spain in 2006 but due to circumstance beyond my control, I stopped paying the mortgage in 2012.
    I have received no correspondence from the bank which changed name/hands in 2013 to either my home address nor the property address. Not 1 letter of correspondence regarding the mortgage or the fact that it has not been pain since some time in 2012.
    Has anyone come across a situation like this before and where do I stand with it. I visited the property this week and it has not been touched since my last visit in 2012. My key still works and my post dating back to 2012 was there.
    This is obviously a question about EU law and not UK law

    • moneyaware

      Hi Brendan,

      Thanks for posting.

      We wouldn’t be able to offer advice on property law – although this may be something Citizen’s Advice can provide you with help on.

      https://www.citizensadvice.org.uk/

      In terms of statute barred debts, in the UK, mortgage shortfalls can become statute barred however the timeframe for this is 12 years rather than 6. However the interest charged on this has a limitation period of six years.

      If you’re struggling with debts please feel free to give our Helpline a call for some advice:

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

      I hope this helps,

      Jen

  • Heather

    Hi, I had a credit card back in the days, last payment date was in June 2009 I thought i paid it off and left the country for few years. A year ago when I applied for mortgage with my fiance I have received a letter from debt collectors that I owe them 1025£ I have called them and said i do not remember having a credit card i na first place. It was ages ago. Few weeks ago they send me a statement where it shows last payment in JUne 2009. Is my debt statuted barred ?

    • moneyaware

      Hi Heather,

      If your debt meets the criteria above it may be statute barred.

      If you believe the debt to be statute barred you can use the template letter above to write to your creditor.
      It’ll be up to them to prove that the debt isn’t statute barred.

      I hope this helps,

      Jen

  • Wayne Card

    Hello I believe I qualify for a statute barred debt under Scottish law as the account is in Scotland. Apparently I had an account that was left slightly overdrawn with an overdraft limit of £300. This has accrued interest over the last 18 years and I have now noticed a letter chasing me for the amount of £300.74. As no transaction has been made my myself or the joint account holder (who I have had no contact with for 18 years). Does the time frame start when the account reaches full overdraft limit or when the last transaction was made 18 years ago also do you have a template letter for Scotland banks and should I keep my appointment with an English branch of the bank to rectify the situation. Thanks

    • moneyaware

      Hi Wayne, thanks for getting in touch.

      If a debt was taken out in Scotland, and it’s been longer than five years since you acknowledged the debt in writing or made a payment towards it, then it’s likely to be considered ‘extinguished’ under the Prescriptions Act.

      It can be a bit complicated with overdrafts sometimes because there’s no fixed time when the overdraft needs to be paid back, but as it’s been 18 years since the account has been used, it may be worth sending the statute barred letter to the creditor to let them know you believe their right to pursue the debt has passed.

      Before you send the template letter, please look into whether this debt has ever been taken to Sheriff’s court or not (you can check this by looking on your credit file). If a debt goes to Sheriff’s court within a 5 year payable timeframe, it may not be classed as statute barred.

      When contacting the creditor, you can use the same template letter that people in England, Wales and Northern Ireland do for state barred debt.

      More details on what you can do are available on our website: https://www.stepchange.org/debt-info/can-i-write-off-debt/statute-barred-debt.aspx

      Kind regards

      Rachel

  • Tony Gibbs

    Hi,

    Just received claim form (CCJ) for an old overdraft debt (£1300). The debt account has declared me default on 12/02/2009 (as per my previously saved credit report info) and since has not received any payment or correspondence from me admitting liability. Therefore by law the debt account has automatically qualified for statute barred on 12/02/2015.
    Kindly can you please advise how do I now respond to the CCJ Claim form and what to write to the claimant in order to get it all resolved?

    P.S. There are no records of this debt account on my latest credit report file, assume it’s been fully extinguished.

    Many many thanks in advance for your time & suggestions!

  • Vekal

    Hi! I had an account showing on my Experian credit report as defaulted in 09 May 2013, however a CCJ was applied to my credit file on 28 Aug 2015

    I am confused as to what will happen, will the defaulted account disappear in 2019 and the CCJ in 2021? if the defaulted account disappears in 2019 is the CCJ still enforceable ?

    Very confused please help!

    • moneyaware

      Hi Vekal,

      Thanks for posting. Understanding credit files can be very confusing! Hopefully I can offer some help.

      The dates you suggest for things to drop off your credit file are right, the CCJ and default should both go away after six years from them being entered.

      When the record of the default goes away there will still be the record of the CCJ and any more recent information about that debt.

      Whether a debt is enforceable or not is a slightly different issue to whether anything is recorded on your credit file about it. The six year time limit referenced in the article above relates to the time creditors have to take legal action, as you’ve already got a CCJ for this debt the limitations period doesn’t apply. The debt will remain enforceable as they’ve got the CCJ in place to enforce the debt.

      I hope this makes sense. Please let me know if there’s anything you’re not sure about.

      Kind regards

      James

      • Vekal

        Hi James thanks very much for clearing that up! so does this mean that even after the CCJ is removed from my credit file / 6 years, or the debt is removed from my profile, the creditor can still chase me for the debt ?