How Long before Debt is Written Off? UK Guide

You may have heard or read about debt being written off by companies after a certain amount of time. While the idea of ignoring the people or businesses you owe might sound tempting – the full story about outstanding debt disappearing is actually more complicated than most people imagine.

Here, we’ll explore what the law says about debts that aren’t paid, when debt does get written off, what kind of debts can and can’t be written off, and whether or not waiting for your debts to be automatically written off is a good idea.

How do debts get written off?

If a creditor (a company or person you owe money to) takes too long to recover what you owe them, a debt can become ‘statute barred’. 

‘Statute’ means ‘law’ and ‘barred’ means to ‘stop’ – so, in plain English, a statute-barred debt is one that the law stops your creditor being able to take any action to collect.

A debt can be statute-barred in England, Wales and Northern Ireland. In Scotland, a debt that the law stops a creditor collecting is referred to as ‘prescribed’. 

Even though there are things written into the law to stop debt collection, there are different timescales and different rules depending on the type of debt in question.

How long until a debt is statute-barred or prescribed?

In England, Wales and Northern Ireland, most unsecured debts can become statute-barred in 6 years. 

In Scotland, the prescription period is 5 years.

This is the amount of time the creditor has to recover the debt or apply to the court for a court order to recover the debt.

While these timescales apply to most unsecured debt, there are some exceptions.

Can all debts become statute-barred?

Again, the rules around which debts can and cannot be chased differ depending on where you live. 

In England, Wales and Northern Ireland:

Credit cards, store cards, personal loans, payday loans, rent arrears, gas and electric bill arrears, council tax arrears, benefit overpayments debts, overdrafts, and some other unsecured debts are subject to the 6 year limitation period. 

However, some debts can be longer, shorter, or may never be written off in this way:

• Personal injury claims have a limitation period of just 3 years.
• Income tax, VAT, and capital gains tax that are paid to HMRC don’t have a limitation period – they can be pursued for 20 years or more.
• Mortgage shortfalls have a limitation period of 12 years for the money you borrowed (the capital) and 6 years for the interest that the lender has added.

What’s more, if the company or person you owe has started court action to get a County Court Judgment (CCJ) to recover the debt before the end of a limitation period, the debt will not have a limitation period.

In Scotland:

Store and credit cards, payday and personal loans, gas and electric bill arrears, housing benefit overpayments, catalogues and overdrafts and a few other unsecured debts are subject to the 5 year prescription period.

Again though, there are exceptions to this:

• Income tax, VAT, and capital gains tax debts have no prescription period and can be pursued indefinitely.
• Council tax debt and some DWP benefits overpayments can have a prescription period of 20 years.
• Mortgage shortfalls have a prescription period of 20 years for the capital you borrowed, and 5 years for the interest the lender has added.

However, if the creditor has already started the process involved with obtaining a court decree before the prescription period passed, the debt can never become prescribed.

When does the clock start on debt becoming written off?

As you can see, lots of unsecured debt can become statute barred or prescribed within 5 or 6 years – but it’s vitally important to understand when this process begins.

The limitation act says that the time limit begins counting down from whichever of the following happened most recently:

• The last time you wrote to (or sometimes emailed) the creditor or debt collection agency and acknowledged that you owed them money
• The last time you made a payment towards the debt
• The earliest date that court action could have started to recover the debt

So, you might not have sent any letters or emails about the debt for a number of years, but if you made a payment recently, then the 5 or 6 year period begins there. 

Don’t forget, if court action has already begun (if you’ve got county court judgments or had visits from bailiffs or sheriffs), then the debt is not going away, no matter how long you wait.

Is it a good idea to wait for my debt to become statute barred?

In short, the answer here is a definite no – it’s not a good idea to wait until your debt is statute barred.

There are a number of reasons for this.

1. Your credit file will be damaged: Every time you buy something that requires a credit agreement (loans, mobile contracts, insurance, etc), a search is done against your credit report. If you have an outstanding debt and arrears, this will make lenders very wary about lending to you. If they do, there’s a good chance you’ll be paying a lot more interest than someone with an average or good credit score.
2. You’ll get lots of debt collector calls and visits: The lender that you’re ignoring isn’t going to wave goodbye to their money without putting in a lot of effort to get it back. This will certainly involve debt collection agencies writing letters, calling frequently, and even coming to your home and sometimes your workplace. Your creditor will add the cost of debt collectors to the money you owe.
3. You will likely end up with a CCJ: When you ignore priority debts (things like council tax bills, energy bills, etc), your creditor will almost certainly apply to the court to force you to repay the money. Even if you ignore these letters, the court often has the ability to recover the debt from your employer or benefits – without your authorisation. This means paying the debt back, and additional costs – and since there’s a court judgment enforcing the debt, it will never become statute barred.

These kinds of debt and money worries are some of the biggest contributing factors for conditions like depression, anxiety, stress, and even the quality of your sleep. Not only is the debt you’re ignoring likely to end up having to be repaid – there’s a good chance you’ll significantly reduce your quality of life if you decide to keep ignoring it.

Are there any alternatives to waiting for debt to be written off?

By now, you can probably see that it’s extremely unlikely that an outstanding debt is going to be written off by the five or six-year limitation period. It becomes even more unlikely if you’re waiting for several debts to be written off.

So, what’s the alternative?

This is where debt solutions are extremely helpful. People rarely choose to ignore debts for no reason – in most cases; it’s simply because people just cannot afford to get on top of their arrears and outstanding debt.

It is possible that a large chunk of your debts could be written off – but not by ignoring them. Instead, talking to a trustworthy insolvency practitioner about possible debt solutions should be your next step. In the stressful time it takes for a debt to be barred or prescribed, you can take control of the situation, receive no calls or visits from debt collectors, and begin rebuilding your credit history for a better financial future.