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Old Debts – Should You Pay or Write Them Off?

Old Debts

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

Have you got old debts that you keep in the back of your mind? Maybe you wonder if these old debts can be written off or if they will come back to haunt you one day.

You’re certainly not alone. Lots of people in the UK have old debts and are worried about what has happened to them or what may happen in the future.

Learn if you can wipe old debts here, how to wipe them – and if you should. 

Common Reasons People Have Old Debts

When someone gets into debt, the company or creditor they owe the money to is usually quick to jump on top of them and request payment. They send out scary letters and maybe even threaten you with legal action.

But for some reason or another, some debts go on for years without being mentioned or without being chased. The common reasons for this are:

  • You hid from these letters and the company didn’t want to take legal action (ignoring debt letter is not a good idea and this is rare!)
  • Administration errors mean you weren’t contacted
  • You kept moving or moved abroad and the creditor couldn’t locate you for a while
  • The company or collection agency closed down and it took time for them to sell your debt to another company
  • You paid some of the debt but then stopped and they haven’t chased you again – yet!

These are just some reason you might have an old debt. But whatever the reason for your old debts, the big question is – should you pay them?

You Can ‘Wipe’ Some Old Debts

There is a legal loophole that allows you to wipe old debts. The official name of this loophole is Statute Barred. It basically means that a debt has become so old that the courts do not want to take on any case relating to it.

Because courts are always being overwhelmed with new cases, they put a time limit on these old debts. And without a judge issuing a CCJ on a debt, the debt can never be enforced meaning you don’t have to pay.

This is not 100% the same as wiping the debt because the debt exists you just can’t be made to cough up. Some companies will wipe the debt if Statute Barred applies, but it is not guaranteed. 

When Do Old Debts Become Statute Barred?

Old debts will be classed as Statute Barred when they are at least six years old. But that is not the only criterion you must hit. There are other boxes your old debt will need to tick if it to be legally unenforceable, namely:

  1. You must not have paid some of the debt in the last six years
  2. You must not have owned up to the debt in writing in the last six years
  3. The debt must not have been issued with a CCJ

If your old debt has been given a CCJ from a judge asking you to pay, there is no way of avoiding this debt. You should look for a debt solution to clear the debt and prevent any further debt interest building on it. 

What to Do If Your Old Debts Are Statute Barred

If you believe your old debts are Statute Barred, the first task is to get confirmation. But don’t seek confirmation from the people you owe the money to. Instead, seek confirmation from a UK debt charity.

If a professional agrees that your debt is Statute Barred, you should then communicate with the company, agency or creditor that you owe the old debt to. And this means sending a Statute Barred letter.

Don’t worry, you won’t have to write any complex letter with legal terms yourself. You can simply send a Statute Barred letter that is downloadable from debt charity websites. When you download it, there will be parts that you edit yourself, such as your name or a reference number if applicable.

The letter will also state that if the company attempts to keep asking for payment, these communications will be seen as harassment.

But Should You Use This Loophole?

You might be reading this and jumping for joy at the thought of wiping your old debts and never living in fear that they will come calling again. And for many people with a lot of debt, this could be the right thing to do.

Yet, there are some limitations when using this loophole because it could prevent other people from lending to you in the future, and it may even reduce your chances of getting mortgage approval. 

And for that reason, it may not be worth using it if the debt is a small amount which you can easily afford. But be aware, just because you owed a small amount years ago doesn’t mean the debt owed will still be the same amount. 

Interest and admin fees could have increased the debt significantly, and you will want to investigate this before making a decision. 

Don’t Aim for Statute Barred!

One other piece of advice is to not aim to make use of the Statute Barred loophole, especially if you have just entered into debt.

If you think you can sit tight and quiet and wait it out six years, that is usually not realistic. As soon your creditor takes you to court and the judge issues a CCJ on the debt – which will be the case if you do owe it and they have proof) – Statute Barred no longer becomes a possibility. 

Moreover, if the creditor can prove they have actively chased you for six years, Statute Barred may not apply. 

Instead of waiting it out, in reality, you are just deferring using a debt solution and your debt will grow much bigger. 

The only time it could be worth waiting it out is if you are really close to the six-year deadline.
Find out more about wiping old and new debts on MoneyNerd!


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