Two Debt Camel readers have asked questions about old-style student loans. These were loans taken out between 1990 and 1998, where the payments can’t be taken directly from your wages. They are also called mortgage-style or fixed-term loans.
When will the debt be written off?
These old student loans will be written off when the last year’s loan is 25 years old, or a bit earlier for older students, see The Education (Student Loans) Regulations 1998 Schedule 2, paragraph 12 for details. But that only happens if you are not behind with payments, eg if you have been validly deferring them.
Mr J’s debt may be statute barred
Mr J asked:
A debt collector has been chasing me for over 8 years for a student loan taken in 1995. I haven’t made a payment or deferment since 1999. There has been no contact in writing since this date by myself.
Every year I get a statement from them asking for payment. I own my own house and am concerned that one day in the future they may go for a charge to secure the debt. Do I just keep ignoring letters each year or do I send a “statute barred letter” to end matters?
A debt is statute barred when a creditor has waited too long to go to court for a CCJ I’ve looked at this in Common questions about Statute Barred Debts. If this has happened, if a court case is started you can defend it and not get a CCJ.
But it isn’t always simple to tell when loan is statute-barred as that link explains, it may depend on whether Mr J was sent a Default Notice. Mr J could talk to National Debtline on 0808 808 4000 about this.
If you have deferred every year, you won’t have paid anything but the debt still wouldn’t be statute barred!
Before a debt collector can get a charge over his house, they would have had to go to court for a CCJ. If the debt is statute barred, then this is a good defence to a court case. The debt collector has his correct address so if they send him a Letter Before Claim, which has to happen before a court case is started, Mr J can explain then that the debt is statute barred. See How to reply to a Letter Before Claim for details.
Mt J hasn’t been deferring his loan. If he had been, the debt will never become statute barred because deferred repaying your loan would count as acknowledging the debt, so the six year clock would start again.
Ms P’s student loans – a very old CCJ
Ms P asked:
I had a student loan in 1992 and was under the assumption that I would not have to start repaying until I earned £17,000. I have never earned that much, I left university early due to ill health and haven’t worked since 1997.
24 years later, I get a letter from a debt collector saying they are acting on behalf of Erudio Student Loans. After a few quite rude/abrupt phone calls I wrote a letter regarding the statue of limitations. After 5 months the calls started again, now they are claiming a CCJ was taken out in 1997 – I have no recollection of this – so the debt can’t be statute barred… Can Erudio enforce this CCJ?
Ms P either never completed the correct documentation every year to defer her loans or it wasn’t correctly handled – the Student Loan Company doesn’t have a good reputation for administration. It’s not clear why Ms P never received the CCJ papers, but Erudio did eventually produce some evidence that there had been a CCJ.
The debt collector is right to say that a CCJ never becomes statute barred. But after six years a creditor has to return to court to get permission to enforce it. This might sound like some formality, but it’s not, it’s very unusual.
Before the court agrees that a CCJ over 6 years old can be enforced, the creditor has to show that there are some unusual circumstances why it didn’t take action within the six-year period. Forgetting about it or not being able to find you are not good enough! The more time goes on, the less chance there is of a court agreeing – after 20 years this is extremely unlikely.
Should you have started to make payments?
Perhaps you have started making payments after you were contacted by a debt collector, but now wonder if your debt was statute barred or a CCJ was too old to be enforced? Talk to a debt adviser to discuss your options. Once a debt is statute barred it will always remain so. Any recent payments you made after that point won’t have changed this.
Don’t let the fact you can’t prove what happened many years ago stop you from getting advice. It’s not reasonable to expect people to still have copies of letters written in 1999 or their 2001 bank statements… That is exactly why there are time limits on legal action.
National Debtline would be good people to discuss your case with.
Had a letter offering you 50% off to settle a very old student loan?
Some people are getting these letters in autumn 2018. Martin Lewis has written a great article on them – he says:
“The vast majority of people who get these letters should treat it like it’s dirty, hold it by the edge and toss it straight away in the bin. Erudio is trying a fast one on most people.”