December 2023

How Long Can A Debt Be Chased In December 2023

Dealing with outstanding debts can be distressing, and it is essential for managing one’s finances to know how long a debt is statute-barred and can be pursued.

This article will discuss the factors that affect the length of time a debt is statute-barred and can be pursued, the concept of statute-barred debt, and the various categories of debt under UK law.

You can listen to an audio recording of this page below.

Statute Barred Debts Explained

When the limitation act due period, typically six years, expires, a debt is barred by statute. The Limitation Act limits the time creditors file a lawsuit to recover their own money owed.

Typically, unsecured debts, such as personal loans and credit card debts, have a six-year statute of limitations.

This one-year limitation period after the act’s due period had passed or commences when the creditor first had legal recourse to collect the debt or when the debtor last acknowledged the debt, the six-month first limitation period has passed, whichever is later.

In some instances, debts may become statute-barred earlier if the debtor has not acknowledged the debt or made any payments within the time limit of the six-year statute-barred limitation period.

However, if the debtor pays or acknowledges the debt within the time limit of this timeframe, the total statute-barred amount of limitations begins again.

Exceptions to the Six-Year Limitation Period

Not every debt is subject to the standard six-year statute of limitations. Specific obligations, including capital gains tax and income tax debts, have no statute of limitations and can be prosecuted indefinitely.

On the other hand, council tax arrears have a 12-year statute of limitations. Mortgage deficiencies, secured debts, and arrears of money owed to the Child Maintenance Service have a 12-year statute of limitations.

Dealing with Debt Collectors and Collection Agencies

When a creditor cannot collect a debt, they may be legally obliged to hire a third debt collector or collection agency or transfer it to a third debt collection agency or collector.

Regarding the statute of limitations, debt collectors and collection agencies must adhere to the same rules as the original creditor. If a debt is time-barred, legal action cannot be taken to recover the amount. How long can a debt be chased when due?

Even if the debt is statute-barred, debt collectors may still attempt to contact the debtor. In such circumstances, the debtor must know their rights and the statute of limitations on their debt.

Impact of a Statute-Barred Debt on Credit File

Even though a debt is statute-barred and-barred debt cannot be legally collected, it may still appear on the debtor’s credit report.

From the date of the default notice, most unsecured debts, such as personal loans and credit card debts, will remain on the credit report for six years.

However, once the six-year limitation period when the debt is statute-barred and of limitations has expired, the debtor is no longer legally obligated to repay the debt.

Different Types of Debts and Their Limitation Periods

The statute of limitations differs depending on the form of debt. For instance, personal loans and credit card debts typically have a first limitation period that has passed a six-year statute of limitations.

Secured debts, such as mortgage deficits, have a first limitation period that has passed a more extended limitation period of the 12-year statute of limitations.

Council tax arrears and benefit overpayments are also subject to a first limitation period that has passed the 12-year statute of limitations. In Northern Ireland, the statute of limitations for most unsecured debts is six years, while it is five years in Scotland.

It is essential to observe that these statutes of limitation apply to legal actions to recover a debt. Creditors may still attempt to contact the debtor after the statute of limitations for court action has expired, but they cannot legally pursue the debt.

Joint Debts and Their Implications

Statutes of limitation may also apply to joint debts, such as bank loans obtained by two individuals. However, the statute of limitations for joint debts may be affected by either party’s actions.

For example, if one party acknowledges the debt or makes a payment, the statute of limitations will begin again for both parties. Individuals with joint debts must be aware of their rights and the statute of limitations applicable to their debt.

Legal Action and County Court Judgments

A creditor may pursue a County Court Judgement (CCJ) court action against the debtor if legal action is initiated within the time limit of the statute of limitations. A CCJ will remain on the debtor’s credit report for six years, whether or not the debt is paid.

When the statute of limitations for a county court judgment or action has expired, and the debtor can demonstrate that the debt is barred, the court may invalidate the claim.

Debt Solutions and Their Effects on Limitation Periods

Debtors experiencing financial difficulties may investigate debt relief orders, debt management, plans, and individual voluntary agreements (IVAs). These debt management solutions may impact the statute of limitations applicable to a debt.

For instance, engaging in an IVA may reset the statute of limitations for all included debts. Debtors must comprehend the effects of a debt relief order and other debt management solutions on the statute of limitations applicable to their obligations.

Dealing with Outstanding Debts in Practical Terms

When faced with outstanding debts, taking actionable measures to manage and ultimately pay off the debts is essential.

Budgeting, negotiating with creditors, using debt solutions and seeking professional counsel from debt charities or the Financial Ombudsman Service can assist debtors in determining the optimal course of action for secured debts.

Even if a debt has passed the statute of limitations, it may still impact the debtor’s credit file and future borrowing opportunities.

Understanding the Limitation Act and Its Exceptions

There are exceptions to the statute barred limitation periods established by the Limitation Act for various types of debts.

For the council tax instance, a creditor who acknowledges the debt in writing or a debtor who makes a payment within the time limit of the council tax statute of limitation period of limitations may recalibrate the clock.

In addition, certain obligations, such as value-added tax and value-added tax, have no statute of limitations, enabling HM Revenue and Customs to pursue them indefinitely.

It is imperative for debtors to be aware of these exceptions and to obtain professional counsel when necessary.

Individuals can better manage their financial obligations and avoid the stress of dealing with creditors and collection agencies if there are rules and regulations governing the duration for which a debt can be pursued.

Remember that knowledge is power, and knowing your rights and responsibilities can make all the difference when resolving debt issues.

Mortgages, Rent Arrears, and Tenancy Agreements

Mortgage and rent arrears are also subject to statutes of limitation. As previously stated, mortgage arrears have a 12-year statute of limitations, while rent arrears typically have a 6-year rule.

However, the statute of limitations for rent arrears may be affected by the terms of the tenancy agreement, the credit agreement or the lease. Tenants and homeowners must know the restriction laws and their rights when dealing with these debts.

"Dealing with outstanding debts can be distressing, and it is essential for managing one's finances to know how long a debt is statute-barred and can be pursued."

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Impact of Missed Payments and Bank Statements

Payment defaults can have enduring effects on a person’s credit history and financial stability long can a debt is due. Payment defaults may be reflected on bank statements and credit reports, affecting the debtor’s ability to obtain future loans or credit agreements.

Debtors need to keep an open line of communication with their creditors to resolve late payments and, if possible, negotiate repayment plans.

Student Loans and Their Limitation Periods

Student loans are a distinct form of debt with their statute of limitations regulations. The law of limitations for student loans in the United Kingdom varies by loan type and date of origination.

The rule of limitations for loans obtained before September 1, 1998, is six years. The limitation period differs for loans taken out after September 1 take you to court, 1998, six-year limitation period, dependent on the borrower’s income and age.

Borrowers must comprehend their student loan limitation period and manage their repayments accordingly.

Debts Related to Benefit Overpayments and Tax Credit Overpayments

Benefit and tax credit overpayments are subject to a 12-year statute of limitations. However, if the income tax or credit file or overpayment was caused by fraud, there may be no statute of limitations.

In such instances, the relevant authority, such as the Department of Work and Pensions, can prosecute the overpayment forever.

Individuals who have received benefits or other income tax or credit overpayments must be aware of the statute of limitations and take the necessary steps to resolve the issue.

Understanding Time Limits and Legal Obligations

Knowing the deadlines for different debts and the debtor’s legal obligations can prevent unwanted legal action and financial stress.

Individuals must comprehend the statutes of limitation applicable to their debts and their rights when dealing with creditors and debt collectors.

By being knowledgeable and proactive, debtors can effectively manage their financial obligations and avoid adverse long-term effects on their credit reports and overall financial health.

Debts Related to Child Maintenance and the Child Maintenance Service

Child support arrears have their own set of rules and collection deadlines. The Child Maintenance Service may pursue these debts forever, as no specific statute of limitations exists.

It is crucial for individuals who may not owe money for the money owed for child support to comprehend their responsibilities and collaborate with the Child Maintenance Service to make payment arrangements and avoid legal action.

Northern Ireland and the Prescription Period

Northern Ireland has slightly different debt collection regulations than the rest of the United Kingdom. Instead of a statute of limitations, Northern Ireland utilises a similar prescription and limitation periods.

Most unsecured debts, including personal loans and credit cards, have a six-year statute of limitations. Northern Ireland debtors must comprehensively understand the prescription and limitation period and how it applies to their unsecured debts.

Factors Affecting the Last Payment Date and the Limitation Period

The final payment date for a debt may be essential in determining when the statute of limitations for a particular long can an obligation begins. If a debtor makes a payment or acknowledges the long can debt due in writing, this can reset the statute of limitations.

In addition, if a creditor initiates legal action within the statute of limitations, the last payment date becomes irrelevant. To effectively manage their debts, debtors must be aware of these factors and their impact on the statute of limitations.

The Role of County Court Judgments and Default Notices

Judgements and a default notice or notices or notices from a county court can significantly impact a person’s credit history and financial stability. A creditor issues a default notice when a debtor fails to comply with the provisions of their credit agreement.

If the debtor fails to remedy the situation after receiving a default notice because of default, the creditor may take further action and seek a county court judgement.

Debtors must respond promptly to a default notice or notices and take the necessary measures to avoid other legal or court action after that.

Stopping Payment and the Consequences

Stopping Payment on a debt can have severe repercussions for the debtor, including legal action, credit file injury, and financial difficulties. In some instances, ceasing Payment may reset the statute of limitations for a debt.

Before ending Payment on their debts, debtors must fully comprehend the repercussions of further court action and seek professional guidance.

Individuals can better manage their financial obligations and avoid the stress of dealing with creditors and collection agencies if they understand the factors that influence debt collection, limitation periods, and debtor rights.

Understanding your rights and responsibilities can make all the difference when resolving debt issues.

Capital Gains Tax Debts and Their Collection

Individuals incur capital gains tax obligations when they profit from the sale of property or investments. A distinct set of rules governs these obligations over other unsecured debt obligations.

Capital gains tax unsecured debts can be pursued by HM Revenue and Customs (HMRC) for up to 20 years, a much-extended and more extended limitation period than other unsecured debt debts.

Individuals with outstanding capital gains tax debts should seek professional guidance to resolve their financial obligations immediately.

Payday Loans and the Risks of Court Action

Payday loans are a form of short-term, high-interest loan that, if not appropriately managed, can result in significant financial difficulties. In the event of delayed payments or default on a payday loan, creditors may file a lawsuit or take you to court to recover the debt.

The statute of limitations on payday loans is six years, during which the creditor may sue or take you to court if the debt remains unpaid. Borrowers should try to repay payday loans on time to avoid potential legal action and financial hardship.

Debt Collection Agencies and Their Tactics

Debt collection agencies are specialised organisations that collect debts on behalf of creditors. These debt collectors agencies may employ various strategies to collect outstanding debt, such as persistent phone calls and letters.

If the statute of limitations has expired, debt collection agencies are no longer legally permitted to collect the debt. However, some unscrupulous debt collectors agencies may pursue the deficit hoping that the debtor is unaware of their legal rights.

To avoid being harassed by debt collectors and collection agencies, debtors must comprehend their rights and the statutes of limitation governing their debts.

Joint Debts and Shared Financial Responsibility

When two or more individuals borrow jointly, such as with a mortgage or loan, they incur joint debts. Both parties are legally obligated to repay the debt, and the creditor may pursue them individually or jointly.

If one party defaults on their portion of the debt, the other party remains liable for the entire amount. Individuals with joint debts must communicate openly with one another and their creditors to effectively manage their shared financial obligations.

Secured Loans and the Risk of Losing Assets

Secured loans, such as mortgages and auto loans, are secured by collateral, typically the asset purchased with the borrowed funds. If the debtor fails to repay the loan, the creditor has the legal right to seize the collateral to recover the money owed.

The creditor may initiate legal proceedings to take the collateral if the debtor cannot make further payments or has ceased paying.

Individuals with secured loans must be aware of the risks associated with loan defaults and take precautions to avoid possible legal action and loss of collateral.

Individual Voluntary Arrangements and Debt Relief Orders

Individual voluntary arrangements (IVAs) and debt relief orders (DROs) are two debt relief options that can assist individuals with unmanageable debt.

An IVA is a formal agreement between a debtor and their creditors that allows the debtor to repay a portion of their debt over a predetermined period. A DRO is a form of insolvency that can relieve people with modest incomes and few assets.

IVAs and DROs can significantly impact a person’s credit file and financial future, so weighing these options thoroughly before proceeding is crucial.

Dealing with Debt Collection Agencies

A creditor may employ a debt collection agency to recover money owed by a debtor. When collecting debts, these agencies are governed by the Consumer Credit Act and must adhere to specific guidelines.

If the statute of limitations has expired, the debt becomes uncollectible, and the debtor is no longer obligated to repay it. Debtors must know their rights and the deadlines associated with their obligations to safeguard themselves.

County Court Judgments and Their Consequences

A County Court Judgement (CCJ) is a court order issued against a defaulting debtor. A CCJ may be given if a creditor successfully sues you in court and the judge rules in their favour. This judgement can hurt your credit file, making it difficult to obtain credit in the future.

The county court judgment decision will remain on your credit report for six years after satisfaction. Individuals who comprehend the legal ramifications of a CCJ can take the necessary steps to resolve their debts and avoid further financial distress.

Mortgage Shortfalls and Repayment Obligations

A mortgage shortfall occurs when the sale of a property does not cover the outstanding mortgage balance. In such instances, the debtor remains liable for the remaining balance.

Typically, the limitation period for mortgage deficiencies is 12 years, during which the lender may pursue the debtor for Payment. If you face a mortgage shortfall, you must communicate with your lender and seek professional advice to determine the best action.

Tax Credit Overpayments and Repayment Options

A tax credit excess occurs when a person receives more tax credits than they are entitled to. In such instances, HM Revenue and Customs (HMRC) may take court action to demand repayment of the money owed overpayment of council tax due.

Typically, the statute of limitations for recovering tax credit overpayments is six years. If you have received an overpayment of tax credits, you must immediately contact HMRC to discuss repayment options and avoid further court action.

Managing Unsecured Debts and Repayment Strategies

Unsecured debts, such as bank loans such as credit cards and personal loans, are based solely on the borrower’s creditworthiness and do not require collateral.

If you have borrowed money and are struggling to repay your unsecured debts, you must prioritise your unsecured debts and develop a practical repayment strategy.

Open communication with your creditors can assist you in negotiating more manageable payment terms and preventing additional court action, such as a CCJ or debt collection.

Rent Arrears and Tenancy Agreements

When a lessee falls behind on rent payments, rent arrears occur. Most tenancy agreements allow landlords to take legal action against rent-defaulting tenants. This may, in some instances, result in banishment from the property.

Addressing rent arrears immediately and maintaining open communication with your landlord to negotiate a repayment plan is essential to avoid such repercussions.

VAT, Capital Gains Tax, and Debt Recovery

HM Revenue and Customs (HMRC) is the typical recipient of Value Added Tax (VAT) and Capital Gains Tax (CGT) debts. These tax arrears have a lengthier statute of limitations, and HMRC can pursue them for up to twenty years.

If you owe money related to VAT or CGT, you must contact HMRC immediately to discuss your options and avoid legal action or additional penalties.

Meet the author

Jane Parkinson

Jane is one of our primary content writers and specialises in elder care. She has a degree in English language and literature from Manchester University and has been writing and reviewing products for a number of years.

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Frequently Asked Questions

What happens after a county court judgment?

Following issuing a county court judgement (CCJ), the debtor is legally obligated to repay the debt according to the court judge’s terms. The creditor may dispatch bailiffs or apply for a charging order against the debtor’s property if the debtor fails to take you to court or make the required payments. A CCJ can hurt a person’s credit file for six years, so it’s vital to resolve it immediately and take you to court yourself.

How to deal with tax credit overpayments?

If you have received a tax credit overpayment, you should immediately contact HM Revenue and Customs (HMRC) to discuss repayment options. If the situation is ignored, HMRC may take further action, such as deducting the overpayment from future tax credits or pursuing the debt through a debt collection agency. To ensure that the overpayment is repaid in a manageable manner, repayment arrangements may be made based on your financial situation.

What is a joint debt, and how is it treated?

Two or more individuals incur a joint debt, each party bearing equal responsibility for repayment. If one party stops paying their portion of collecting debt, creditors can pursue the remaining parties for the unpaid balance of secured debts. When the statute of limitations expires, the debt may become uncollectible, meaning the creditor cannot legally pursue the debt. Communication between joint debtors and creditors is necessary to manage repayments and resolve potential issues.

Can a debt be collected after the limitation period begins?

Once the statute-barred limitation period begins or commences, a creditor has limited time to file a lawsuit to recover a debt. If the debt is statute-barred, of limitations has expired, the obligation is no longer legally enforceable, and the creditor cannot sue you for the remaining balance. It is important to note, however, that the debt still exists, and if the debtor makes a further payment or acknowledges the debt in writing, the statute of limitations may resume.