Statute barred debt: A step-by-step guide

posted by in Living with 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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  • Andrew Harrison

    Hi there, how long would it take for a debt to become statute barred if i live in Scotland but the debt was accrued whilst I lived in England ? Also why does it read as current status… default, balance… £0 on my credit report ?

    • moneyaware

      Hello Andrew

      In Scotland if the creditor waits too long, the debt will become extinguished. Once a debt is extinguished, the law says it no longer exists so there’s nothing more the creditor can do collect it. For most types of debt in Scotland, the limitation period is five years.

      This applies to most common debt types such as credit or store cards, personal loans, gas or electric arrears, housing benefit overpayments, payday loans, catalogues or overdrafts, there are some exceptions though including mortgage shortfalls and council tax. A default will still appear on your credit file and may affect your ability to get credit.

      You can read more about it here: https://www.stepchange.org/debt-info/can-i-write-off-debt/statute-barred-debt.aspx

      If you suspect that your debts have become extinguished (which your credit file suggests may be the case) then you should write your creditors to explain that the debts are extinguished:

      That you do not admit liability for this debt, and do not intend to make any further payments to it for the following reasons:
      • The earliest point at which you could have sued for the full balance owing to this debt was more than five years ago
      • No payment has been made to this debt by me, any joint account-holder, or any third party acting as my agent for a period of more than five years
      • No written admission of liability for this debt has been made by me, or any third party acting as my agent for a period of more than five years

      If you’re concerned about your finances and think that you may need some advice I would recommend using our online debt advice tool:
      https://www.stepchange.org/Debtremedy.aspx

      Or giving us a call for some individually tailored advice on 0800 138 1111 (Mon-Fri 8am-8pm, Sat 8am-4pm)

      I hope that this helps.

      Thanks
      Becca

    • moneyaware

      Hello Andrew

      Apologies for the delay on answering this – we needed to check the legislation for you.

      The majority of unsecured credit provided in the UK is done so under the Consumer Credit Act – which is UK wide. The process of having debt extinguished – ‘Statute Barred in E&W or Prescribed in Scotland’ – is different due to the fact that debt policy has been devolved. In simple terms because you’re based in Scotland – it doesn’t matter where the debt was accrued – Scottish debt rules will apply;

      In Scotland if the creditor waits too long, the debt will become extinguished. Once a debt is extinguished, the law says it no longer exists so there’s nothing more the creditor can do collect it. For most types of debt in Scotland, the limitation period is five years.

      This applies to most common debt types such as credit or store cards, personal loans, gas or electric arrears, housing benefit overpayments, payday loans, catalogues or overdrafts, there are some exceptions though including mortgage shortfalls and council tax. A default will still appear on your credit file and may affect your ability to get credit.

      You can read more about it here: https://www.stepchange.org/debt-info/can-i-write-off-debt/statute-barred-debt.aspx

      If you suspect that your debts have become extinguished (which your credit file suggests may be the case) then you should write your creditors to explain that the debts are extinguished:

      That you do not admit liability for this debt, and do not intend to make any further payments to it for the following reasons:

      • The earliest point at which you could have sued for the full balance owing to this debt was more than five years ago
      • No payment has been made to this debt by me, any joint account-holder, or any third party acting as my agent for a period of more than five years
      • No written admission of liability for this debt has been made by me, or any third party acting as my agent for a period of more than five years

      If you’re concerned about your finances and think that you may need some advice I would recommend using our online debt advice tool:
      https://www.stepchange.org/Debtremedy.aspx

      Or giving us a call for some individually tailored advice on 0800 138 1111 (Mon-Fri 8am-8pm, Sat 8am-4pm)

      I hope that this helps.

      Thanks
      Becca

  • Thomas Martin

    Hi I left my rented house in July 2010 owing £ 3500 in rent I agreed with the landlord if I could pay the arrears over 18 months I did make some payments until last payment in January 2013 but I still owed £ 2500 the landlord has just issued a county court claim. Is my debt statute barred ? Thanks

    • moneyaware

      Hello Thomas

      Thanks for your comment.

      If you have made a payment within the last 6 years then your debt would not be Statute Barred, you can read more about it here:
      https://www.stepchange.org/debt-info/can-i-write-off-debt/statute-barred-debt.aspx

      Making a payment towards the debt essentially resets the start date of the limitation period, for example;

      If you live in Wales and made a payment on 1 January 2015 and your debt has a six year limitation period, it will become statute-barred from 1 January 2021.

      Because you made a payment towards the debt in Jan 2013 your statute barred period wouldn’t begin until Jan 2019.

      Receiving a CCJ can be a warning sign that you may need debt advice, you might want to consider using our Debt Remedy tool that gives free online debt advice: https://www.stepchange.org/Debtremedy.aspx

      If you need further help dealing with the CCJ you can also read information on our website about how you respond to this:
      https://www.stepchange.org/debt-info/ccj.aspx

      I hope this helps.

      Thanks
      Becca

  • Peter

    I have a credit card debt over six years. In the last year started receiving letters from a debt collection company. Never replied directly with this company, sometimes just sent letters back written on them not known at this address. Today opened a letter from this company, it said it would take accept half of debt if paid in ful within 30 days. Should I pay it or is it statute barred.

    • moneyaware

      Hello Peter

      Thanks for your comment. The debt may be Statute Barred, if it is older than 6 years but you’ll need to consider:

      When was the last time you wrote to the creditor acknowledging the debt?
      When did you last make a payment to the debt?
      What was the earliest date the creditor could have started action against you i.e. when you defaulted?

      The start date of the limitation period is whichever of these happened most recently. You can read are full advice on Statute Barred debt on our website:
      https://www.stepchange.org/debt-info/can-i-write-off-debt/statute-barred-debt.aspx

      If you are receiving letters from debt collection agencies it can mean that you might benefit from debt advice, if you think you might need assistance our online tool can help:
      https://www.stepchange.org/Debtremedy.aspx

      I hope this helps,

      Becca

      • Peter

        Never ever contacted the creditor acknowledging the debt . Only sent some letters back with not known at this address written on them. Was in July 2010 I made last payment before I moved.

      • moneyaware

        Hello Peter

        From the information you have provided then yes, your debt may be Statute Barred, you can use the sample letter on this page to the creditor to notify them:
        https://www.stepchange.org/debt-info/dealing-with-debt-problems/sample-letters.aspx

        I hope this helps.

        Thanks
        Becca

      • Peter

        Hi
        Did a credit report,says account defaulted on 31/01/12. Also says my last payment was in June 2011. So does that mean my account becomes statute barred at beginning or ending of June 2017?

      • moneyaware

        Hi Peter,

        The debt becomes statute barred if there’s been a gap of six years or more between now and the last payment made.

        Please be aware that the Limitations Act doesn’t ‘cancel’ the debt or write it off. What it does is prevent a creditor from taking further action through County Court as they would have had ample opportunity to go down this route during the six year period.

        Kind regards

        Rachel

  • Sylvia Harris

    Hi I have a debt from Nov 2010 the default was not made until June 25 2011 but the last payment was nov 21 2010 and no acknowledgement was made when does the limitations period begin it was a old phone contract. The dca Lowell are saying because the defaulted was enetered 9 months after first missed payment that the debt does not become time barred until the 25 June this year any help is appreciated as they are now threating court action

  • Sylvia Harris

    Also may I add they are being unreasonable and not providing any information that is helpful to help me determine this debt isn’t or is time barred they have basically said we understand you believe the debt is statue barred but basically our client is saying it is not helppp!

    • moneyaware

      Hi there Sylvia, thanks for posting

      The limitation act comes into force once six years have passed since you made your last payment or acknowledged in writing that you owe the debt. It doesn’t start from the date the creditor issued a default notice or from the date the account actually defaults.

      When a debt becomes statute barred through the limitation act, it will still ‘exist’ and may still show up on your credit file as there’s still a balance owed. What it does prevent however is the creditor taking the debt to county court to enforce further action against you such as bailiffs.

      If you believe this debt is statute barred, there’s a template letter on our website that you can print off and send to the creditor that’s currently collecting for the debt: https://moneyaware.co.uk/wp-content/uploads/Statute-Barred-Template-Letter.pdf

      I hope this helps

      Kind regards

      Rachel

  • Angela Smith

    I wondered if you could give me some advice, on checking my file I have a CCJ for a loan which is dated Jul 2014. I am now trying to clean up my credit file and wondered what the best course of action would be, ideally I would like to get this removed but from what I’m reading I’m not entirely sure that’s possible, however I have had no contact from the company since then (honestly I can’t say whether I received the paperwork confirming the court hearing either) but definitely nothing since then. What is the best course of action.

    • moneyaware

      Hi there Angela, thanks for getting in touch.

      Unpaid CCJs will remain on your credit file until they’re paid off. Should you make a payment arrangement on a CCJ, it will eventually ‘drop off’ your file once six years from the final payment you make has passed.

      it’s quite common to not hear from creditors very much once they’ve successfully logged a CCJ against you. However, be aware that they do have the option to seek further enforcement against you such as bailiffs, charging orders and attachment of earnings.

      If you dispute the CCJ, You can find out more about possible options you may have on our website: https://www.stepchange.org/debt-info/ccj/cant-pay-a-ccj.aspx

      Kind regards

      Rachel

  • Aaron DuchenneNow Richardson

    I have just got a credit card with my bank at my new address. I did have debts with my old credit cards well over 6 years at my old address i think they will chase me for them. But i put in for PPI claim for a bank i mortgaged with but think they brought up my old credit cards aswell. How will this work now

  • david garside

    hi i have just recieved a letter asking me to pay back a student loan which is 30 years old. also in feb of 2008 i was declared bankrupt in oldham county court by hmrc do i have to repay this money i was under a supervision order until august 2010.

  • Georgina Barratt

    Hi I have entered into a mutual exchange However my housing association has said the other party has old tenancy arrears from 15 years ago with them and they won’t proceed until these are paid. The lady wasn’t aware of these and has had no contact since her tenancy was ended with them. Can they hold this against her We both really need to move but due to her being on benefits and paying bedroom tax she hasn’t the money to clear them

    • moneyaware

      Hi Georgina, thanks for posting.

      I’m sorry to hear of the difficulties you and the person you’re exchanging properties with are facing at the moment.

      The housing association does have the right to request the arrears are paid before the mutual exchange can go ahead. It may be worth her while getting in touch with Shelter or her local Citizens Advice to see if they can give her further advice on what to do next.

      Kind regards

      Rachel