Statute Barred Debts
In order to commence court action to recover a debt, creditors must do so within a period of time set down by law (the Limitation Act 1980). If time runs out, they may not be able to recover the debt through the court as it might be ‘statute barred’
The law in England, Wales and Northern Ireland differs to the law in Scotland. In England, Wales and Northern Ireland: If a creditor does not initiate court action in time, the debt will become ‘unenforceable’ or statute barred. The debt will continue to exist but statute law dictates that a creditor cannot obtain a county court judgment and subsequently not be able to recover the debt through the courts. Depending on the debt alternative action may be possible.
In Scotland: If a creditor does not initiate court action in time, the debt will become extinguished. Once a debt is extinguished, the law states that the debt no longer exists and therefore the creditor can no longer pursue you for it.
Contact from your creditors
If you are certain that your debt is statute barred, you should write to the creditor to explain that you won’t be making any further payment as the debt is statute barred under the Limitation Act 1980. You should request that they stop contacting you about the matter, or, if they believe the debt is still owed, ask them to provide you with evidence.
If a creditor has not contacted you for some time, it is possible they will make contact just before the expiry of the limitation period. Whilst you have the option to ignore any contact, in the hope the limitation period expires, this is not considered to be best practice as court action may be commenced by your creditor before time runs out.
County Court Action
Expiry of the limitation period & the FCA
Credit Reference files
Some debts might still appear on your credit file following the expiry of the limitation period, even though the debt is statute-barred. As this information is visible to other lenders it can make it harder to obtain any future credit.