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In the UK, there are certain rules surrounding how long you can be chased by a creditor for an unpaid debt before it becomes unrecoverable, or ‘statute barred’.
However, there is no straightforward answer, and the time limit depends on a variety of factors, such as the type of debt, who you owe money to, how long the debt has been outstanding, when the debt was last acknowledged or paid, and even where you live.
This can sound daunting but don’t worry, it isn’t as complicated as it sounds. This guide will take all of these factors into account to explain how long different types of debt can be chased in the UK. So whether you’re dealing with credit card debt or mortgage arrears, you can know exactly how long a creditor has left to take legal action against you.
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Under the Limitations Act 1980, which sets out deadlines for bringing legal action against an unpaid debt, a creditor has six years to chase you for an unsecured debt, or simple contract debt, in England and Wales.
In Scotland, the Prescriptions and Limitation (Scotland) Act 1973, states that a creditor has five years to chase you for an unsecured debt.
Unsecured debts include:
However, while this limitation period applies to most debts, there are exceptions to these rules, and your creditors are free to take legal action against you at any time before the limitation period expires.
While most debts are subject to the standard five or six-year limitation period in the UK, there are some exceptions to this rule.
When you can’t afford to make monthly payments towards your mortgage, your home may be repossessed.
If the money made from the sale of the property doesn’t cover the amount owed, you’ll be responsible for the difference, or the ‘mortgage shortfall’.
The debt you owe to the mortgage lender for the mortgage shortfall won’t become statute barred for 12 years, double the standard limitation period for most debts, while the interest on the mortgage shortfall can be chased for six years. This means that your mortgage lender could take legal action against you at any point during those 12 years.
In Scotland, mortgage arrears can be chased for 20 years, while the interest can be chased for five years.
Benefit overpayments can happen for several reasons. For example, you may have forgotten to inform the Department for Work and Pensions (DWP) of a change of circumstances or they may have made an honest mistake when calculating your payment.
When you owe money to the DWP, it can be chased for six years. However, given the extra powers of the DWP to recover debt directly through your wages, it’s unlikely that benefit overpayments will go that long without legal action being taken.
In Scotland, benefit overpayments can be chased for anything from five to 20 years depending on your circumstances.
Council Tax is an unsecured debt, meaning it will become statute barred after six years. However, it’s important to note that local councils will rarely let a debt go this long without taking legal action against you to recover the money owed.
Each local council has their own process for dealing with Council Tax arrears, but after several missed payments and reminders, most will apply to the court for a Liability Order.
This is a legal demand for payment that gives them the power to recover the money directly through your wages or benefits, often with added legal costs.
In Scotland, Council Tax arrears can be chased for up to 20 years.
Most creditors have a set process for recovering money owed, but when other methods have failed, they may take you to court and issue a County Court Judgment (CCJ) against you.
This can happen at any point during the limitation period, and when it does, the limitation period will no longer apply and you can be chased for the debt indefinitely.
However, if the creditor wants to enforce the CCJ after the limitation period has passed, they must seek permission from the court to collect the debt.
Income Tax and VAT are not covered by the Limitation Act, meaning they can be chased indefinitely and can never be written off as long as there is still money owed.
Capital gains tax debts are also not subject to a limitation period and can be chased indefinitely.
For money owed to the Child Maintenance Service (CMS) or Child Support Agency (CSA), the rules can be a little more complicated.
For example, there is no limitation period for the CMS or CSA to apply for a Liability Order, but once it has been granted, they have six years to use certain types of enforcement, such as bailiffs, to recover the money owed.
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The limitation period starts on the cause of action or, in other words, when legal proceedings could have first been brought against you or when your agreement states the creditor can take court action against you. For some debts, this is when a default notice has been sent to you.
Once the limitation period starts, it will continue running until the debt becomes statute barred or until:
If any of the above actions occur before the limitation period expires, the timer will restart.
When you’re in debt, it’s important to keep track of the limitation period so you know when you can expect it to end.
If you don’t know whether a debt is statute barred, there are some steps you can take to find out:
Depending on how confident you are the debt is statute barred, you can choose to ignore it.
However, ignoring a debt is only a good idea if you are confident it is statute barred as your creditor can still take legal action against you up until the limitation period expires.
Contacting your creditor is one of the quickest ways to find out if a debt is statute barred.
However, if the debt is still active, sending your creditor an email, letter, or text message will count as written acknowledgement and will reset the limitation period.
Instead, telephone your creditor to ask if the debt is still enforceable. If they claim you still owe the money, you have the right to request proof.
Statute barred debt still exists and your creditor can still chase you for the money owed, the only difference is that they can no longer take legal action against you to force you to repay it.
This means that, while you won’t receive a CCJ, your creditor may hire a debt collection agency or debt collectors to recover the debt on their behalf.
Remember, a statute barred debt can never be enforced using legal action. If a creditor or debt collector threatens you with legal action over a statute barred debt, politely explain that the amount stated is no longer enforceable under FCA regulations and ask them not to contact you again.
Being harassed by a creditor for a statute barred debt can be stressful, but you don’t need to put up with it.
Knowing what counts as harassment can help you assert your rights and, if necessary, make a complaint.
You may be able to take action if a creditor has done any of the following to try and force you to repay what you owe:
If your creditor is harassing you for payment on a statute barred debt using any of the above tactics, you must collect evidence to support your claim, such as witness statements, contact logbooks, and letters and messages received, before complaining to your creditor directly.
If your creditor ignores your complaint, you can contact a financial body or trade association, who will take your complaint on board and inform you of your next steps.
Your creditor may belong to a trade association or professional body with a code of practice outlining how they are supposed to behave towards you.
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While a debt won’t necessarily appear on your credit file labelled as statute barred, your credit score may take a while to recover from the impact of being in debt or having a default in the first place.
Any missed payments and defaults will appear on your credit report for six years. During that time, your credit score will be lowered and you may struggle to be approved for another credit agreement, such as a mortgage, loan, bank account, or even a phone contract.
For example, the limitation period on a debt could begin when you receive a default notice. Because default notices stay on your credit report for six years, the debt will become statute barred at the same time the default notice is removed from your credit report. After this, your credit score will start to gradually improve as long as you don’t accrue further debt.