A question I often get from debtors is “How long will it be till my unpaid debt is written off?” The truth is that there’s no guarantee that that will ever happen.
In most cases, creditors will pursue you for your debt until you pay them. This prevents the debt from ever becoming unenforceable.
However, if an extended period of time elapses without any communication between you and creditor, then the debt could indeed become unenforceable.
Today, I’ll be discussing how that happens and how the specified time period may vary for different types of debts.
How Long will it Take for My Debt to be Written Off?
The limitation period for most types of unsecured debts is six years. This mainly applies to debts such as credit cards, payday loans, personal loans, catalogues, etc.
There are some secured debts that have different limitation periods. For example, mortgage shortfalls have a limitation period of twelve years.
Keep in mind that once the limitation period has been completed, the debt becomes unenforceable but it still technically exists.
This means that while your creditor will not be able to pursue court action against you, they can still take other actions to recover their debt from you.
If your creditor is authorised and regulated by the Financial Conduct Authority, then FCA guidelines state that they are not allowed to contact you if your debt has become statute-barred.
Thus, if your debt has become statute-barred and a creditor that operates under FCA guidelines is attempting to contact you regarding your debt, then you are entitled to report them to the FCA.
However, if your creditor does not operate under FCA guidelines, then they may contact you and attempt to recover their debt from you even after it has become statute-barred.
They still can’t take you to court, of course, but they are allowed to contact you and take other actions to recover their debt unlike creditors operating under FCA guidelines.
You must also keep in mind that if you get a County Court Judgment (CCJ) taken out against you before your debt is statute-barred, then this prevents that debt from ever becoming unenforceable.
Another thing to be aware of that there are certain types of creditors that don’t even need the help of the court in order to take action to recover their debts from you, e.g. tax credit overpayments or debts to the Department of Work and Pensions (DWP).
Organisations such as HM Revenue and Customs can take money straight out of your wages and benefits in order to make up for your debt. They can do this without ever needing to go to court. Thus, even if your debt has become statute-barred, it won’t matter.
You can also still be legally contacted for council tax bills even if the last payment you made was six years ago. It’s also extremely unlikely that your local council will allow your debt to reach six years or over.
This is why you should always treat priority debts such as council tax debt, income tax debt, etc. very seriously. They have very dire consequences if you ignore them.
Once a Debt is Statute-Barred, Does it get Removed from My Credit File?
The time period after which the mention of a debt is removed from your credit file is six years after the date of the default notice.
As I mentioned earlier, it also takes six years after the default notice for a debt to become statute-barred as well.
Thus, your debt is removed from your credit file at the same time as when it becomes statute-barred.
Should I just Ignore Payments for Six Years until the Debt is Statute-Barred?
Many people consider this limitation period a solution to their debt problem but the truth is that it hardly ever works for anyone. It should not be considered a debt solution.
In most cases, your creditors will not let six years go by without taking some sort of action against you if you’re refusing to make your payments.
Once you stop making payments towards your debt, your creditor will send you a default notice which will inform you that if you don’t resume making payments towards your debt, then they will take action against you.
This action would most likely be taking out a County Court Judgment (CCJ) against you. You are usually given 14 days to respond to the default notice.
I highly suggest that if you get a default notice, you should make a payment towards your debt and then continue making payments as your creditor requests.
If you cannot afford to make the payments that your creditor has stated, you should still contact them and tell them this.
You should never ignore your creditors in hopes that they will somehow forget about your debt and not take any action for six years. In most cases, ignoring them will end up in you getting a CCJ taken out against you.
I Made a Payment Towards My Debt after Six Years. Have I Made it Enforceable Again?
This depends on what type of debt it is.
If it’s an unsecured credit debt, then the limitation period for it is six years. Thus, if you made a payment towards after six years, then it would still remain unenforceable.
However, other debts such as mortgage shortfalls have a limitation period of twelve years. Thus, if you were to submit a payment towards it after 6 years, then it would definitely refresh the limitation period. This would mean that it would take another twelve years for the limitation period to be completed for it.
The bottomline is that once the appropriate limitation period for the type of debt has been completed, then it becomes irreversibly unenforceable. You making payments towards it after it has become unenforceable does not make it enforceable again.
In the end, all you have to keep in mind is that for most debts, if the last time you had contact with your creditor was 6 years ago, then the debt has most likely become unenforceable.
You must keep in mind that although it has become unenforceable, it still technically exists.
Always make sure to know what the limitation period for your specific type of debt is. It may be different from the typical 6 years.