Many people ask us about the length of time creditors can chase them for debt and whether they are no longer responsible after 10 years. However, there is no easy answer as it depends on several factors such as the creditor, whether legal action has been taken, your location, and if you have recently acknowledged the debt.
This guide will provide information on various types of debt and explain how the rules may differ based on your location. It will also offer guidance if you receive communication regarding an old debt. The information will be presented in easily digestible sections.
What's Included?
Aren’t all debts written off after 6 years?
People often think debts are automatically erased from their credit history after 6 years based on comments from friends or website discussions. Some even assume that all debts will be gone after 10 years. However, this is not entirely true, as the process is more complicated than that. Although some records disappear from your credit file after 6 years, your complete financial history or debts won’t be wiped out automatically just by waiting long enough. Actually, certain obligations can remain unpaid for periods exceeding 10 years.
We’re focusing on this because ignoring debt can harm your financial health. Debt rarely disappears on its own; ignoring it can cause you to owe more than the original amount. It’s important to know how much you owe, the legal requirements for your type of debt, and explore appropriate ways to deal with it or have it forgiven.
How can Credibble help me?
Dealing with debt can be overwhelming, especially when debt collectors or bailiffs are involved. Don’t panic! The Credibble Team is here to help. We can help you to stop proceedings and reduce the cost of your debt for free.
We offer a unique debt solution service partnered with Equifax, a world leader providing consumer credit report data. This means we have instant access to all your major debt without you having to search through your paperwork. Furthermore, we’re supported by the Natwest Accelerator Programme for business and have a multiyear relationship with the organisation. Our extensive and unique personal finance knowledge goes far beyond debt solutions – so you can trust that you are in safe hands.
What does the law say about a time limit for debts?
The laws regarding the time limits for debt collection vary depending on your place of residence.
In England and Wales
In England and Wales, there is a law called The Limitations Act 1980 which sets guidelines for companies pursuing debt. It is commonly known as a ‘statute of limitations’, which means the period of time during which the law is applicable. Generally, the law allows companies to chase debt for up to 6 years, but this rule has some exceptions. Creditors can take various actions before the 6-year limitation period is over.
In Scotland
The time limits for debts in Scotland are regulated by The Prescriptions and Limitation (Scotland) Act, 1973. This “statute of limitations” outlines the timeframes where the law is applicable. In Scotland, the statute of limitations for debt is usually 5 years, but there may be exceptions to this.
Different time limits for different debts
After a specific period, a debt can become “statute barred”, which means it is no longer legally enforceable.
It is important to understand that the limitation period varies depending on the type of debt and the country, England and Wales or Scotland.
Debt time limits in England and Wales
In England and Wales, statute-barred debt doesn’t go away. It only means that the company you owe money to can’t take legal action to recover the debt because they have run out of time. Typically, the company will write off the debt and stop trying to get it back since they won’t have the courts’ support. The specific time limit varies depending on the type of debt.
Unsecured debts
Unsecured debt refers to a debt that is not backed up by any of your assets. Some examples of unsecured debt include:
- credit card debt
- personal loans
- payday loans
- overdrafts
- store cards
If you’re not in touch with your creditor due to a change in address or name, they may lose track of your debt status. Nevertheless, the debt remains unresolved even if you don’t hear from your creditor. For debts in England and Wales, the creditor cannot take legal action to recover the debt if the last payment or admission to owing the debt was made more than 6 years ago.
County Court Judgment (CCJ)
If you miss payments and fall too far behind on your debts, creditors may work with a debt collection agency to help recover the outstanding debt that you owe. This is a common practice among creditors.
If a debt collector cannot recover the money, they will most likely file a lawsuit against you. The judge will determine whether or not you owe the money and are required to repay it.
The Limitation Act no longer applies once you have been issued a County Court Judgment to repay a debt. This is because a judge has made new orders, meaning the debt can be pursued without any time limitations.
However, if a County Court Judgment is older than 6 years, the creditor may require further permission from the court to continue their efforts to collect the debt.
Council Tax arrears
Local authorities follow a complete process of recovering debts, which involves sending letters and texts. They may also instruct debt collectors to retrieve any money owed for council tax bills, similar to companies.
If the efforts to collect outstanding council tax do not succeed, the council may request a ‘liability order’ from the Court. A liability order would allow the council to deduct money from your salary or benefits payments before you receive them.
If the council has not taken any action within 6 years, the Limitations Act will come into effect and they will not be able to take legal action.
However, it is important to note that councils usually seek a liability order long before the 6-year limitation period expires. As a result, they can collect owed money well ahead of the debt becoming statute barred.
Mortgage shortfalls
If your property is repossessed by your mortgage lender and its sale does not cover the amount you owe, you may be liable to pay the difference. Repossessing a house comes with various expenses added to the outstanding loan balance. Even if your property is sold for a good price, you may still be in debt.
The debt you owe to the mortgage company for the shortfall will not be considered statute barred for 12 years, which is a longer period than unsecured debts.
Income Tax and VAT
HM Revenue and Customs can continue to pursue your debt for income tax or VAT indefinitely in England, Wales, and Scotland. These debts are not subject to the Limitation Act, and, therefore, will never be forgiven. HMRC will persistently attempt to collect the outstanding amounts.
Benefit overpayments
Benefits payments can be incorrect due to various reasons. Mistakes can be genuine, or fraudulent claims may be detected by the Department of Work & Pensions (DWP), leading to the recovery of funds.
The DWP can attempt to collect any debts owed to them for up to 6 years. Although the debt may become unenforceable after this time, it is uncommon since the DWP can retrieve funds from your benefits.
Time limits around debt in Scotland
Debt time limits in Scotland are regulated by a different law, which means that the period for chasing certain debts is not the same as in other places.
In Scotland, if a debt becomes statute barred, it is regarded as legally repaid or abandoned, which differs from England and Wales law. Therefore, under Scottish law, creditors are prohibited from contacting or harassing you regarding that debt.
Unsecured debts
In Scotland, unsecured debts such as personal loans, payday loans, credit card debts, and debts from bills like energy bills can be enforced for up to 5 years, just like in England and Wales.
Decrees
Decrees issued in Scotland are comparable to County Court Judgments (CCJs) in England and Wales. This means that, like CCJs, any debt with a decree against it has no time limit, so creditors can continue to pursue the debt until it’s paid off or resolved through a debt solution.
Mortgage arrears (capital)
Scotland has distinct regulations for various types of outstanding mortgage components. If you owe money related to the ‘capital’ (the borrowed sum, not counting interest), it can be pursued for up to 20 years.
Mortgage arrears (interest)
If a mortgage lender is pursuing you to repay a debt related to the interest charged on your mortgage, they have a time limit of 5 years before the debt becomes statute barred.
Council tax
Council tax payments unpaid in Scotland will not be considered statute barred until 20 years have elapsed.
Income tax and VAT
If you are a resident of Scotland and owe a debt to HMRC for income tax or VAT, there is no time limit for pursuing this debt. This is the same as in England and Wales.
Overpayments of Social Security Benefit
If you were overpaid Social Security Benefits in Scotland, you may be required to repay the debt for up to 20 years.
Which debts can you be chased for after 10 years?
The information shows that there are several debts that creditors may continue to pursue for over 10 years. These are:
- If a debt is enforced through a CCJ or Decree
- Mortgage shortfalls or Mortgage Arrears
- Income Tax and VAT
- Scottish Council Tax and some benefit overpayments
This list is broad because almost any lender can apply for a CCJ.
When do these limitation periods begin?
When thinking about the natural write-off of debt, it’s important to consider when the clock begins ticking.
The period for debt collection doesn’t begin when you sign a credit agreement; it starts when you acknowledge owing the debt or make a payment towards it. In Scotland, the time limit for debt collection is determined by the date of the creditor’s last contact with you.
It’s important to know that the clock can also be reset.
We will examine how these factors function in greater detail:
Regarding the law, a payment towards an agreement you’ve signed proves the agreement is valid.
If you stop paying your 4-year personal loan after 2 years and wait for 6 years, the limitation period will end on that day. However, if you make a small payment when contacted after not making a payment for 5 and-a-half years, the time limit resets and the debt can be legally pursued for another 6 years.
The last time you admitted owing the debt
If you admit to owing money to a creditor in writing (and sometimes electronically – like in emails or online forms), this can be used as a legal confirmation that you owe the money.
If you signed a letter confirming a repayment plan or similar, the limitation period will begin from that date.
If you don’t address debt collection attempts for 5 years and then admit that you owe the debt, the limitation period will start again and extend for another 6 years, during which your creditor can continue to pursue collection.
Is it a good idea to wait for your debts to become statute-barred?
Refraining from opening debt collection letters or answering calls from debt recovery companies may seem attractive since it can be unpleasant. However, attempting to wait out 6 or 10 years is not a recommended approach.
In reality, though, it’s a tactic that rarely works and can lead to a badly damaged credit report and increased money owed.
If you are facing action from creditors, it will be noted in your credit history and may decrease your likelihood of being accepted for credit. This may affect your ability to obtain phone contracts, monthly insurance payments, and rental agreements.
In addition, trying to wait out the limitation period for debt collection is not a good plan as it comes with real financial costs. Even during the initial stages, you may incur missed payment charges or administrative costs that will add up to the amount you owe. If you involve debt collectors or bailiffs, the costs could increase significantly, up to hundreds or even thousands of pounds.
Are you being chased for debts that are more than 10 years old?
As you have probably noticed, many debts can be pursued for over 10 years and beyond, especially if a creditor has obtained a CCJ or Decree that requires repaying the debt. Essentially, any debt can remain unpaid for an indefinite period.
Ignoring your debts with the hope of disappearing can result in significant financial expenses and harm your credit score, making your life challenging. This has been mentioned before.
To prevent legal action, consider contacting your creditors to negotiate new repayment terms, even though it may not seem appealing. Most companies appreciate the communication and accept a reasonable monthly payment towards your outstanding balance. Remember that some creditors may insist on full payment, which may be unattainable for many people.
If you are being pursued for debts that are over 10 years old, they are unlikely to disappear. Therefore, it can be beneficial to look into formal debt solutions. Opting for a Government-approved debt solution may lead to some of your debt being forgiven. Additionally, a representative will communicate with your creditors on your behalf, ceasing any phone calls or letters. This gives you some time to collect your thoughts and get a handle on your finances.
Frequently Asked Questions
Can a 10 year old debt be enforced?
In England and Wales, most debts over 6 years old can no longer be legally enforced. Exceptions are some student loans, court fines, child support [1]. most debts in England and Wales become statute barred and creditors lose legal enforcement rights. [4]
How long can a debt be chased in the UK?
In England and Wales most debts can be pursued for up to 6 years from the last payment or acknowledgment. The timeframe is 5 years in Scotland. [2]
Do I have to pay a 10 year old debt?
In most cases for consumer credit like loans or credit cards, you are not legally required to repay debts over 6 years old in the UK. [1]
Can I be chased for debt after 20 years UK?
No, after 20 years all consumer credit debts would be considered statute barred in the UK and creditors have no legal right to pursue you for payment. [3]
How long before a debt becomes uncollectible in the UK?
For consumer credit like loans and credit cards, the debt typically becomes legally uncollectible and unenforceable after 6 years in England and Wales, and 5 years in Scotland. [5]
What happens if you leave the UK with outstanding debt?
Leaving the UK does not cancel debts – you can still be pursued through international collections. Legal options depend on the country. [6]
Is debt a criminal Offence in UK?
Owing a debt is not itself criminal in the UK. But fraud or deception related to incurring or avoiding debts may constitute a criminal offence. [7]
References:
- https://www.stepchange.org/debt-info/debt-and-statute-barred-debt.aspx
- https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/limitations-on-creditors-action/
- https://debtcamel.co.uk/debt-options/guide-to-statute-barred-debts/
- https://www.experian.co.uk/consumer/guides/debt-statute-limitations.html
- https://www.stepchange.org/Scotland/Debt-law-in-Scotland.aspx
- https://www.justlanded.com/english/United-Kingdom/UK-Guide/Banking-Money-Tax/Debts
- https://www.inbrief.co.uk/offences/debt-offences/
