Credit cards are a great financial tool that a large majority of Brits take advantage of.
However, they can also land you in a lot of debt which is evident from the fact that a significant amount of Brits have personal debt.
While such debts definitely are the source of financial burden on a lot of communities, it’s also true that they have a time limit. Your creditor has to pursue you for them within a given time. If they fail to do so, it becomes unenforceable.
Will My Debt Become Unenforceable After 7 Years?
I get a lot of questions about what happens to debt after 7 years. It’s a misconception that your debt becomes unenforceable after seven years as this is the amount of time that it takes for certain negative credit items to disappear from your credit report in other major countries such as the USA and Canada.
In the UK, however, a debt becomes unenforceable after only six years.
A debt becomes statute-barred or unenforceable if the creditor waits too long to pursue you for it. This ‘limitation period’ or statute of limitations is six years.
Keep in mind that for a limitation period to be valid, the following conditions need to be met:
- You have not made a written acknowledgement of your debt in 6 years.
- You have not made a payment towards your debt in 6 years.
- The credit has not taken use of court action against you for 6 years after the date you defaulted.
Keep in mind that all of these conditions need to be met in order for your debt to be statute-barred.
If any of these conditions are not true, your limitation period will not be complete. For the first two conditions, the limitation period will restart and for the last condition, your limitation period will be irrelevant. Here’s why:
If your creditor has been contacting you in regards to your debt but you haven’t been acknowledging and have not been making payments towards it, then your account will eventually default.
When this happens, you will usually be sent a default notice which will warn you to pay the debt and bring your account up to date. You may even be contacted by debt collectors from a debt collection agency that the creditor may have hired.
You have about 14 days to respond to the default notice. After these 14 days, the creditor has the right to pursue court action against you by taking out a CCJ.
When a CCJ is taken out against you, your debt can never become statute-barred. There is no limitation period on a CCJ. Thus, you will be obligated to make payments to your creditor.
If you still refuse to do so then the creditor may try to make you go bankrupt and/or bailiffs may be sent to your house in order to collect your possessions to secure the debt.
If you get lucky by some circumstance and your creditor decides not to pursue court action against you for 6 years after your default date, then your debt will be statute-barred.
Thus, if, for example, you defaulted on the 1st of January 2020, your debt would become statute-barred according to the statute of limitations on the 1st of January 2026. This would be assuming the first two conditions are met as well, of course.
Is There Anything My Creditor can Do if My Debt has become Statute-Barred?
Your creditor is not left with a lot of options if your debt becomes statute-barred. An old debt that has become unenforceable can’t even be restarted if you make a payment to it.
The Financial Conduct Authority is clear about the fact that it’s unfair to pursue a debtor for a debt that has become statute-barred. If your creditor keeps asking you for it even though it has become unenforceable, you have the right to tell them to back off. If they refuse to do so, you can report them to the FCA.
Once it becomes unenforceable, your creditors also cannot take out a CCJ against you.
Keep in mind that while your debt has become unenforceable, it still technically exists. Creditors that don’t operate under the FCA take advantage of this. These creditors can still contact you and ask you to pay your debts.
There are some other creditors which can still ask you for payment without needing to go to a court depending on the type of debt. However, credit card debt does not fall under this so you don’t need to worry.
The Debt I Owed has Become Statute-Barred. What Should I Do?
If you’re definitely sure that it has become unenforceable and your creditor isn’t contacting you about it, then you really don’t need to do anything.
If you’re sure it has become unenforceable but your creditor is contacting you and asking you for payment. You can write to them and inform them that it isn’t enforceable anymore and you don’t have to pay it back to them.
If they refuse to accept your statement, then ask them for proof of the fact that the debt is enforceable.
Always remember that it’s not your burden to prove that the debt is unenforceable, it’s your creditor’s burden to prove that the debt is enforceable.
If your creditor keeps contacting you regarding the unenforceable debt without sending you any proof, you can report them to the FCA.
On the other hand, it’s very common and understandable for you to not be sure about whether it’s unenforceable or not. It’s very difficult to remember exact dates from 5 or 6 years ago.
If this is the case with you, I suggest getting a hold of your credit report. Mentions of your debts stay on your credit report for 6 years and they can give you a clear idea of whether you still owe your creditor or not. You can also sift through old bank statements to get a clearer idea of this.
If you are still unsure about when you last acknowledged your debt or when you made your last payment, you have two options:
- Contact your creditor and ask them if your debt is unenforceable or not. If they state that it’s still enforceable, ask them for proof. If they do indeed send over proof, you’ll need to start paying it back.
- Don’t contact your creditor and hope for the limitation period to pass on its own. This is something I do NOT recommend at all. If you have not been in contact with your creditors in a long time, there’s a great chance they will take court action against you just before the limitation period ends.
How Will This Affect My Credit Score?
Most debts stay on your credit report for 6 years and since they become unenforceable after 6 years, they will be removed from your credit report at the same time they become unenforceable.
You can then start working on improving your credit score so you’ll have less trouble securing credit in the future.
If a debt has become unenforceable but it’s still on your credit report, you can dispute it to get it removed. It’s important that the information in your credit report is accurate because having a bad credit score can significantly impact your ability to secure credit.
In the end, if the limitation period on a debt expires, it’s important that you know what to do if creditors come asking for payment from you in the future.
Keep in mind that you don’t have to pay a penny if the debt has become unenforceable. Let your creditors know this and let them know you’re not paying them anything unless they can prove that the debt is enforceable.