The above is a question I’ am sure many people have wondered but the majority of people won’t want to ask. You don’t really want to go to a debt agency for help and then ask how long you have to avoid paying the debt off before it’s actually written off, do you?
This makes sense but knowing how long you can actually be chased for debt is valuable information. But before we go into answering the question it’s important that anyone reading who is in currently in debt knows that avoiding debt till it’s written off isn’t an advisable strategy.
Have people ever managed to avoid paying a debt due to it being written off? Yes, they likely have but those cases are few and far between, in the majority of cases the people you owe the debt to will have chased it up long before the time limit has expired.
However, as I said earlier it’s still valuable information to know and could certainly help in the future. So, let’s take a look at what you need to know about the timespan before debts can be written off.
Statute Barred Debt
Debt isn’t actually written off in traditional sense after a time limit on a debt as passed it will become a statute barred debt. A statute barred debt is not enforceable, this is governed by the Limitation Act 1980.
The Limitation Act 1980 sets a timespan for creditors to chase up a payment, if your creditors have not chased up your debt in this timeframe then they can’t enforce payment of any debt. The timespan you have will actually vary depending on the debt.
But don’t panic this isn’t as complicated as you might think, for the majority of debts your creditor will have up to six years to chase up payment. This is doubled to 12 years for mortgage debts/ shortfalls. But the time this period starts will be measured from your last payment, not necessarily the time you loaned the money.
If you haven’t paid anything of the debt then the timeframe will start from your acknowledgement of the debt. The timeframe you have to pay back the debt is known as the limitation period once this over the debt will not be enforceable in the majority of circumstances.
Does Limitation Act 1980 Always Apply?
The Limitation Act 1980 does not apply in every circumstance if a court judgement also known as a CCJ is registered against you because of the debt then it can still be enforced. This applies even if the limitation period has passed.
The Limitation Act 1980 also doesn’t apply if you owe a debt to the Crown this is most commonly due to income tax. Some creditors might also seek to recover debts without using the courts which allows them to sidestep the Limitation Act 1980 to some degree.
The rules in regards to paying back debt in Scotland are a little different but thankfully more simplistic. Statute barred debts are simply written off after five years have passed. After this time creditors are not permitted to seek payment for you. However, if a court has issued a decree during the five year period then you will still need to pay back the debt.
How Does Statute Barred Debt Work?
I mentioned earlier that statute barred debt isn’t actually written off. So, it might seem like I’ve not really answered what we set out to but while a statute barred debt isn’t written off it really is as good as in the majority of circumstances.
A debt that is statute barred doesn’t magically disappear into the void (wouldn’t that be nice) but it does remove much of the hassle that would usually come with paying back a debt. The Limitation Act 1980 basically means that creditors can’t chase you indefinitely for any debts you owe it also means that if they try to take you to court you’ll be better able to defend your case.
As a bonus, you also won’t get a CCJ either. The burden of proof is also reversed if a debt is statute barred. A creditor will need to successfully prove you need to pay back the debt, you don’t need to prove you don’t. If a creditor hasn’t kept in regular contact with you during the limitation period then it will be very difficult for them to argue their case.
So, while a statute barred debt isn’t officially written off for many people it will be as good as. Many creditors won’t bother to chase up debts after so long as passed unless they believe they have a very strong case. The exception to this is certain creditors will have other ways to collect any outstanding debt.
For example, the DWP (the Department for Work and Pensions) can still collect money from a persons wages or benefit payments if they are owed money. This is something they can still do even if the six-year limitation period has passed.
The Importance of Statute Barred Debt
While statute barred debt isn’t a way to avoid paying back debt it is still an important thing to know about. If you suddenly receive a letter about an old debt that you didn’t pay back then it is likely to be statute barred which might mean you don’t have to pay it back anymore since it is non-enforceable now.
Debt collection agencies are usually employed to chase up old debts and many people will pay them back when they could easily argue that they are now non-enforceable due to how much time has passed. So, knowing how exactly statute barred debts work is very important and sure to come in handy.
Of course, you can still pay back any outstanding debts if you wish but they will be classed as non-priority debts. This means you can pay them back how you wish and when you want, your creditors will have to go by your payment plan.