If you had a debt to which you haven’t made any payments in a while and your creditor hasn’t contacted you about it either, there’s a chance it could have become statute-barred.
With the conditions of the limitation period being so difficult to track, oftentimes, it can be hard to know if a debt has become statute-barred or not.
Today, I’ll be discussing how you can identify whether a debt of yours has become unenforceable or not.
How can I Tell if My Debt is Statute-Barred?
For most types of debts, if you stop making payments, your creditor has to take action against you within a certain time limit.
This action is typically, first sending you a default notice asking you to make your payments and then pursuing court action against you if you don’t start making payments after the default notice.
For most types of debts, the limitation period is six years. This means that if your creditor does not take action against you for six years after the default notice, then your debt has become statute-barred.
According to the Limitation Act 1980, your limitation period can restart if you make a payment towards your debt or if you admit in writing that you owe them the debt. This would mean that it would be another six years till the debt becomes statute-barred.
As you can probably imagine, it can be difficult to identify when a limitation period has started and whether it has been reset or not throughout the course of six years.
You must also keep in mind that if your creditor has taken out a County Court Judgment (CCJ) against you, then your debt cannot become statute-barred i.e. there is no time limit on it.
You must check the last date you made a payment and the date on which you were sent a default notice. If it has been six years since the date you were sent a default notice, then your debt is statute-barred now.
Keep in mind that according to the Limitation Act 1980, six years is the limitation period for most types of debts but not all of them. For example, mortgage shortfalls have a limitation period of twelve years.
The Limitation Period isn’t Complete
If you know your debt is still within the time limit of it being enforceable, then you have two options:
- You can choose to ignore it and hope that it eventually becomes statute-barred.
- You can contact your creditor and start making arrangements to pay it back.
While the first option may seem tempting, it’s not something I would recommend. While it’s true that there’s a chance you may get away with it, it’s extremely unlikely.
It’s very rare for a creditor to not take any action to get back their debts from you. If you choose to ignore your debt, it’s likely that your creditor will take out a County Court Judgment (CCJ) against you.
This will be a much worse position for you since bailiffs could now be sent to your home if you miss any payments. Not to mention that a CCJ has an extremely negative impact on your credit score and will make it very hard for you to secure any type of credit in the future.
Many creditors also wait for the limitation period to reach near its end before pursuing court action against you.
This is why I always recommend people to go for the second option. If you’re absolutely sure that the limitation period has not been reached yet, then I suggest contacting your creditor and explaining your plan to them.
It’s important to be communicative with your creditors and to assure them that you’re doing all you can to make payments towards your debt.
If you feel you’re unable to afford paying back your debts, you can tell this to your creditors. If you have a copy of your expenditures and income, you can send it to them.
They may sit down with you and attempt to formulate a payment plan which would be affordable to you. In some cases, depending on the type of debt, they may even decide to reduce the amount you owe.
I’m Unsure if the Limitation Period is Complete or Not
If you’re unsure if the limitation period is complete or not, then you pretty much have the same two options: to ignore it or to find out whether it has been completed or not.
You can contact your creditor to ask them about the details of your debt and whether it has become unenforceable or not.
It’s extremely important that you don’t contact your creditor in the form of writing if you’re unsure if the debt is statute-barred or not.
This means that you should not send them an email, a letter, a text or a message in any type of online chat. If you write to them, they may use this as proof to reset your limitation period.
The best way to inquire about this is through a phone call. Ask them about the debt and whether it has become a statute-barred debt or not.
If they say that it is still enforceable, then you can ask them for proof. This can be a payment receipt from you dated within the last six years or a written acknowledgement from you dated within the last six years.
Always remember that you don’t have to prove if a debt is statute-barred. Your creditor has to prove that it isn’t statute-barred.
If your creditor is unable to come up with anything to prove that your debt is still enforceable, then you can rest easy.
However, if they do end up sending you proof that the debt is still enforceable, then you’ll have to start making arrangements to pay it back.
I’m Sure that the Limitation Period has been Completed and My Creditor is Still Contacting Me
If you’re absolutely sure that the debt is unenforceable, then you can write to your creditor and ask them to stop contacting you regarding it.
Explicitly state in your letter that you don’t admit any liability for the creditor’s claim. Don’t say that you’re not entirely sure what you owe or if you think that the amount they’ve stated is wrong.
If your creditor continues to argue that it isn’t a statute-barred debt, then they’re going to have to take you to court and present evidence in order to prove it.
If your creditor tries to pursue court action against you for a statute-barred debt, I highly suggest you contact an independent debt charity immediately for help such as Payplan.
Keep in mind that if a creditor is unable to prove that the debt isn’t statute-barred, then they shouldn’t be contacting you in regards to that debt. If a creditor continues to contact you, you can report them to the Financial Conduct Authority.
You must note that creditors that are not regulated by the FCA can still contact you in regards to your debt even if it has become unenforceable. This means that these creditors can’t pursue you in court if the debt has become unenforceable but they can still contact you in regards to it.
Another thing to keep in mind is that there are some creditors that can take action against you for the debts you owe without needing to go to court. An example of this could be income tax or council tax. HM Revenue and Customs, for example, can take money directly from your wages or benefits as payment for your debts.
Most of the information provided in this post applies to unsecured credit debts such as credit cards, personal loans, payday loans, catalogues, etc.
In the case of secured debts such as mortgages as well as priority debts such as council tax debt, you may want to do a little more research as the same rules will not necessarily apply.
With so many conditions and regulations, it can be confusing to determine whether or not a debt has become statute-barred or not.
The best thing you can do in this case is to know your rights as well as all the conditions required for a limitation period to be valid.
The important thing to keep in mind is that the proof of burden is not on you but your creditors. They’re the ones who have to prove that a debt isn’t statute-barred if they’re going to attempt to recover any money from you.