Unless you have been taken to court, most debts cannot be legally enforced once a certain amount of time has elapsed.
In England and Wales that amount of time is six years. At that point the debt becomes statute barred. In Scotland it’s five years and at that point the debt becomes extinguished. There are slight differences between a debt that has become statute barred and a debt that has become extinguished, but to all intents and purposes they are the same thing.
It’s important to note that the six (or five) years start running from the last time that you made a payment or acknowledged the debt in writing. It isn’t six (or five) years from when the debt arose. As soon as you make a payment or acknowledge the debt the clock is reset and the time starts running again.
This means that if you took out a loan seven years ago and made repayments for the first three years, that debt would be not statute-barred or extinguished. You would have acknowledged the debt four years ago and it would be at that point that the time started running. The debt would still be legally enforceable for another two years in England and Wales, and for another year in Scotland.
If a debt is statute barred or extinguished, this does not always stop debt collection agencies from attempting to collect the money. In fact, some debt collection agencies specialise in buying statute barred or extinguished debts cheaply in the hope that some people won’t realise that their debts are no longer legally enforceable and will pay up.
If you are being chased for a debt that is statute barred or extinguished you are not legally obliged to do anything and there is nothing the debt collection agency can do because the debt is no longer legally enforceable. If you don’t do anything, though, the debt collection agency will continue to chase you. As such, it might be in your interest to send the following letter:
I refer your letter dated [date] regarding this account.
I believe that the debt to which you refer is [statute barred/extinguished] and as such, I will defend any court claim.
If I do not receive either evidence that the debt is not [statute barred/extinguished] or confirmation that you will not be contacting me further, I shall file a complaint with Trading Standards and the FCA.
I look forward to your response.
Note that if the debt is not statute barred or extinguished, sending this letter would be written acknowledgement of the debt. That would mean that the six year period (or five year period in Scotland) starts running again. You should only send this letter if you are sure that the debt is statute barred or extinguished.
If you need further help
Speak to Citizens Advice if you help with your debts. They’ll be able to help you, and they provide advice to people who are struggling with their debts for free.