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Out of Date Debt

If you haven't heard from an organisation you owe money to (a creditor) or acknowledged the debt you owe in any way for six years or more, you may not have to pay it.

Debts like these are covered by the Limitation Act 1980, which is a statute of limitations that provides time scales as to how long a creditor can chase you (the debtor) for an unpaid debt.

The Limitation Act 1980 only applies when no acknowledgement of a debt has been made between you and the creditor for six years for unsecured debts or 12 years for mortgage shortfalls and secured loans.

This law only applies to residents of England and Wales.

When does debt go out of date?

If the creditor fails to maintain contact with you for six years or more, you may be able to claim that the outstanding debt is statute barred under the Limitation Act 1980.

This means the creditor cannot use the legal system to enforce payment of the outstanding debt.

The time limit starts from when you last acknowledged owing the debt or made a payment to the account. 

When can a creditor pursue an unsecured debt?

You may think a creditor has written off your debt if you haven't heard from them for a long time. The reality is that the debt still exists.

The creditor can still contact you and they are entitled to chase the outstanding debt, even if the debt has been statute barred, but they are unable to use legal proceedings to force you to pay.

Creditors can pursue an unsecured debt if:

  • The creditor has taken court action against you within the past six years for unsecured debts or 12 years for mortgage shortfalls (e.g. CCJ)
  • You made a payment to the account within the last six (unsecured debts) or 12 years (mortgage shortfalls), which includes people named on the credit agreement and not just you
  • Acknowledgement of the debt has been made in writing and signed by the person making it

County Court Judgments (CCJs)

If you have been previously taken to court by the creditor and a County Court Judgement (CCJ) has been granted, you will not be able to use the Limitations Act 1980 and the debt will still be enforceable (with the courts permission) even if the debt is more than six years old.

However, if the CCJ was granted after the debt had been statute barred, then you can ask the court to set it aside.

Council Tax

If your Council Tax was due more than six years ago the council will not be able to ask the Court for a Liability Order, which can lead to the Council Tax being recovered by an attachment to your wages or benefits. It is unlikely that a council will allow a council tax debt to reach six years old or more.

Mortgage shortfalls

The time limit for mortgage lenders to pursue mortgage shortfalls (the result of repossession) is 12 years before the debt becomes stature barred.

Income Tax and VAT

The HM Revenue and Customs can always pursue debts and no time limit applies.

Benefit Overpayments

Debts caused by benefits overpayments can be chased by the Department of Work & Pensions (DWP) for longer than six years without going to court. The DWP can deduct them from your current benefits.

What do I do if a creditor contacts me after six years? 

Once a debt has become statute barred, there aren't any actions the creditor can take to unbar it. Once six years without contact or acknowledgement has passed, legal action to enforce the debt is still barred even if you were to make a payment or acknowledge the debt.

If a creditor contacts you after the debt has been statute barred and you have stated your intention not to pay the debt (normally in writing), the creditor is breaching the Financial Conduct Authority (FCA) rules as indicated in the FCA Consumer Credit Sourcebook. 

Responding to your creditors

If a creditor who hasn't had any communication with you in six years or more contacts you about an outstanding debt, write to them quoting the Limitation Act 1980 without acknowledging the debt. Once you have disputed the debt, it is up to the creditor to prove the debt isn't statute barred. 

An example template letter to use is: 

Dear Sir/Madam


Re: Account No/Reference No:
 

Firstly, no debt is acknowledged to you.


You have contacted me regarding the account with the above reference number, which you claim is owed by me.

 

Secondly, I would point out that under the Limitation Act 1980 Section 5 the alleged debt is Statute Barred.

 

The Financial Conduct Authority (FCA) rule 7.15.8 states that 'a firm must not continue to demand payment from a customer after the customer has stated that he will not be paying the debt because it is statute barred.'

 

Unless you can provide evidence of payment, written acknowledgment of any outstanding debt in the last six years and a copy of the signed credit agreement, please do not contact me any further.

 

Should you continue to harass me regarding this alleged debt without providing the documentation required then a complaint will be made to the Financial Services Ombudsman without further notice.

 

In addition, this letter will be brought to the attention of the court if any proceedings are issued in respect of the above.

 

Yours faithfully

 

(Your signature)
 

Once you have completed the letter and sent it to your creditor, make sure you:  

  1. Use recorded delivery so you can prove postage
  2. Keep a copy of the letter for your records
  3. Don't acknowledge the debt

For ease of use, download the template below.

Out of Date Template Letter

Will this help me with my debt? 

Lots of people look at this solution to their debt problem. Few find it works for them.

It is unlikely the creditors will forget about the money you owe them for such a long period of time. You cannot make your debts statute barred, so ignoring the letters and phone calls from the creditors will not work.

Taking action now will usually be better than waiting years to see if your creditor forgets your debt. This is unlikely and there are other solutions that can control your repayments or help you write off a portion of your debt.

Get debt answers

If you are unclear about whether your debts are out of date and statute barred applies, you can call our expert team free on 0800 019 2095 or start a  live chat