Fighting Debt - a user guide

5) DISPUTING A DEBT

c) Statute Barred Debts

If a lender allows a set time to pass without receiving any payment an action for recovery may become barred.

What is the Limitation Act?

The Limitation Act 1980 sets out the rules on how long a creditor has to take action against you for a debt i.e. take you to court. The time limits are different, depending on the type of debt that you have.

Under the Limitations Act 1980, time limits are:

in simple contracts, 6 years and in contracts under seal, 12 years.

If the debtor acknowledges the debt in writing or makes a part payment within the original limitation period, then the time limits start to run again from the date of acknowledgement or the date of payment.

Once the time limit has passed, even the debt is legally acknowledged as being owed, the creditor is not able to take any legal action against the debtor in order to recover the debt. It is considered unfair if a creditor / debt collector misleads the debtor into believing the debt is still legally recoverable or press for payment after the debtor has stated no payment can be made.

This could amount to harassment contrary to Section 40(1) of the Administration of Justice Act 1970.

If the creditor has been to court and there is a county court judgment outstanding, then you cannot use the Limitation Act to dispute you owe the debt, however the creditor may need the court's permission if the judgment is over six years old.

A debtor can decide to pay the debt after the expiry of the time limits whether in installments or one payment.

If you being chased for a Statute Barred Debt you can send the following template letter.