If you have an old debt, you may wonder if you still have to pay it? Can your creditors really take you to court after this long?
English law says a creditor only has a limited amount of time – typically six years – to take you to court. The term for a debt that is so old that it can’t be enforced in court is “statute barred”.
(You may have heard the phrase being time-barred, that means the same thing. Sometimes it is called status barred because the term statute-barred has been misheard.)
This article answers the most common questions people have about statute-barred debt, including when the six-year period begins.
If you live in Scotland, the laws are very different. Phone National Debtline on 0808 808 4000 as they have Scottish advice experts.
What is statute barring?
Creditors have to take legal action about debts within certain times which are set out in the Limitations Act 1980. For most sorts of debts and bills in England and Wales this time is six years.
If the creditor doesn’t start court action within this time, the debt is not enforceable because it is “statute-barred”. When a debt is statute-barred it still exists legally, but because you cannot be taken to court for it, you do not have to make any payments to it.
This six-year period begins when the creditor has a cause of action – this is the point at which the creditor could go to court for the debt.
In January 2019 there was a decision in the Court of Appeal (Doyle v PRA) that changed the point at which the six-year period starts for some debts including credit cards and loans.
If you are making the normal minimum monthly payments to a debt, you can’t be taken to court for it. It is only when you have missed payments and the creditor can go to court that the 6-year period starts.
Think of a timer that runs for 6 years – which can be reset
A good way to think of statute barring is that there is a 6 year timer. This is set running when the creditor has a cause of action. The sand takes 6 years to drain slowly through… at the end, your debt is statute barred.
But if you make a payment to the debt or acknowledge it in writing during the six years, the clock is reset back to start at 6 years again.
So if you are making monthly payments, even tiny ones, a debt will never become statute barred as the clock resets back to 6 years every month. For you this article isn’t relevant, instead read Can I stop paying this old debt?
What is a cause of action?
Someone can’t sue you for a debt unless they have a good reason to – this is their cause of action. What that good reason is depends on the type of debt, how it is regulated and, sometimes, what the contract for the debt says.
This has always been complicated for some debts such as overdrafts which don’t have regular payments. You may have stopped using your overdraft 8 years ago, but your bank may not have realised this for a long while – so when would they have the right to sue you?
The January 2019 court judgment decided that a creditor’s cause of action does not start for some credit debts (including some loans and credit cards) until the creditor has sent you a Default Notice. The problem here is that you may not remember when you got that or if one was ever sent. Also the creditor can just delay sending you this so your debt may never become statute barred.
How can I tell if my debt is statute-barred?
Unsecured debts, including most loans, credit cards, catalogues and overdrafts will normally be statute-barred in England and Wales if you can say YES to all the following four points:
- it had been more than six years since you last made a payment; and
- the creditor has a cause of action more than six years ago; and
- you haven’t acknowledged the debt in writing during this time; and
- the creditor hasn’t already gone to court for a CCJ.
With a joint loan, it matters if either of you makes a payment. If you have split-up, you may think a debt is statute-barred but it isn’t because your ex has made a payment to it in the last 6 years.
Acknowledging the debt has to be in writing. If you haven’t done this, it doesn’t matter if the creditor has written to you, or you have discussed the debt on the phone – this won’t stop the debt being statute barred. If you have reclaimed PPI, this is likely to have acknowledged the debt.
The cause of action is the most difficult point to determine here. See this National Debtline factsheet which has a section on When Does the Limitation Period Start Running?
If you can say Yes to points (1), (3) and (4) but are unsure about point (2) on the cause of action, I suggest you call National Debtline on 0808 808 4000 and talk through your situation with them.
Sometimes the exact date a debt becomes statute barred matters:
- if you write saying that a debt is statute-barred and you are wrong because the debt isn’t, then your letter is likely to have “reset the clock” by acknowledging the debt;
- if you have received a court form about a debt, you need to know whether you can defend the case on the grounds the debt is statute barred.
Questions about different sorts of debt
When does a CCJ become statute barred?
It never does. But if the creditor hasn’t taken any enforcement action in six years, they will need to apply to the court for permission if they want to enforce the debt by using bailiffs. This is unusual.
If you are contacted after 6 years about a CCJ that you have not been paying, phone National Debtline for advice.
Statute barring for mortgage shortfalls and secured loans
If your debt is still secured – you are still living in the house there is a mortgage or a secured loan on – then statute barring isn’t relevant. What matters is if you get too far into arrears the lender can go to court to repossess your house.
But what about when the house has been sold so the security no longer exists but you still owe money on the debts?
For a debt resulting from a mortgage shortfall, the time allowed in the Limitations Act is twelve years. But many lenders follow the old Council for Mortgage Lenders code, now part of the MCOB Rules (Mortgage Conduct of Business), that says:
anyone whose property was taken into possession and sold more than six years ago, and who has not been contacted by their lender for recovery of the outstanding debt, will not now be asked to pay the shortfall.
See National Debtline’s Factsheet on Mortgage Shortfalls for more details, such as what does “contact” mean? And phone National Debtline if you are contacted about a mortgage shortfall debt which is between 6 and 12 years old.
Do tax debts or benefit overpayments become statute barred?
Tax debts such as Income tax and VAT do not become statute barred. If you are wondering if your debt is a “tax debt”, HMRC has a list of “not tax debts”, which do become statute barred.
The situation regarding benefit overpayments is more complicated – although they can become statute-barred, there are other ways the debt could still be recovered. You should take advice about these sorts of debts – contact National Debtline or your local Citizens Advice are very good with benefit issues.
What about old council tax arrears?
A council should not go to court and ask for a liability order for council tax arrears more than six years after the council tax became due. But if the council already has a Liability Order, this will never become time-barred.
If you get a letter out of the blue about a Liability Order for council tax arrears from ten years ago, this may feel very unreasonable. One of the main reasons time limits exist is that people don’t keep paperwork forever, so you may have no way of proving that you paid the debt at the time. This is one of the rare occasions when it may be worth asking the creditor to Write-off the Debt. It may also be worth getting a local councillor involved for council tax arrears.
What about utilities?
Gas, electricity and water bills become statute barred 6 years after the date on the bill. There are also rules regulating when a supplier can “back bill” – send a new bill for charges more than 12 months old. If you think you have a problem with back billing, go to your local Citizens Advice and ask for their help.
Getting letters and court forms about a debt you think is statute barred
Can I ignore a letter about a statute barred debt?
Are you 100% sure that it is statute barred? If you aren’t certain talk to National Debtline.
If you do not recognise the debt you should probably write a “Prove It” letter to your creditor. This is worded so that it doesn’t acknowledge the debt.
If you recognise the debt but you are certain it is statute-barred, you could ignore a letter. But it might be less stressful to reply pointing out that it is statute-barred rather than get more letters and possibly court forms. National Debtline has a template letter you can use – phone them about this.
Creditor says I made a payment in the last 6 years but I didn’t
Ask your creditor for the date of this alledged payment. Then get your bank statements for that month – you can still get these even from closed bank account going back 6 years.
If there is no trace of you making this payment, complain to the creditor and attach a copy of the bank statement. Ask them for further defails of the payment.
If the creditor persists, take this complaint to the Financial ombudsman.
Can I ignore a Letter Before Action/Claim about a statute barred debt?
This is a bad idea. It is much easier to challenge a creditor by saying the debt is statute barred using the Reply Form than it is to defend a court case.
See How to reply to a Letter before Action which looks at what you should do when you think the debt is statute barred.
I have been sent a Claim Form for a statute barred debt – what should I do?
Do NOT ignore the Claim Form. If you do, a judgment will be made against you in default because you haven’t replied, even if your debt is statute barred.
So if the creditor takes you to court, you must defend the claim on the grounds that it is statute-barred. And also look at whether you have any other defences eg can the creditor produce the CCA agreement?
If you are unsure what to write on the defence form, phone National Debtline and talk to them.
Other FAQs about statute barred debt
My debt is statute barred, do I still owe the money?
Yes. Your debt still exists, it hasn’t been written off, it can still get sold on and you may still receive letters about it.
The Financial Conduct Authority’s rules about statute-barred consumer credit debt (loans, credit cards etc) are here. They say that if you state you will not pay a statute barred debt, the creditor cannot continue to ask you to pay it.
If you want to get rid of the debt completely and you are absolutely sure a debt is statute-barred, you could consider making a very low Full and Final Settlement offer, perhaps under 10% – see Full & Final Settlements for more details. Your letter should point out that the debt is statute barred and hence unenforceable.
A debt has dropped off my credit record – is it statute barred?
Obviously your debt is old but it may not be statute barred.
The six-year period for the Statute of Limitations is NOT the same as the six-year period that a debt stays on your credit file after a default. If a debt isn’t showing on your credit file it may be statute barred but it may not be.
A debt will stop showing on your credit record six years after any default was recorded. But if you have made some payments to it in the last 6 years, perhaps just a token £1 a month, then it isn’t going to be statute barred.
My debt has been sold, does this effect becoming statute barred?
No, it doesn’t matter if your debt is sold. The sale doesn’t “reset the clock”. If it was already statute-barred at the time it was sold, it remains statute barred. If it wasn’t yet statute barred, it will be 6 years after the “cause of action”, see above.
My debt is statute-barred – if I make an affordability complaint will this re-open the debt?
Once a debt is statute barred this is permanent, it can never become “unbarred” so making an affordability complaint won’t change this.
But if your complaint is upheld, the lender will sometimes not send you the money but set it off against the remaining debt – even though it is statute barred the debt still exists. In this situation don’t use a claims company, or you could end up owing them money.
Also it can be hard to win affordability complaints about very old debts. If you are being asked to pay this old debt, it may be simpler to just tell the creditor it is statute barred and not pay – National Debtline has a template letter that you could use, so phone them.
I can’t give you advice on whether your debt is likely to be statute barred. If you are concerned about a specific debt, phone National Debtline on 0808 808 4000. Or you could use their good web chat.
But if you have a general question about statute barred debt, ask it in the comments below.