Statute of Limitations and debt in the UK – Everything you need to know

The Statute of Limitations on debt in the UK means that you might not have to pay your debt if too much time has passed for your creditor to pursue it.

The Limitation Act of 1980 established a time limit for your creditor to chase your debt. Once this time limit is over, you can’t be forced to pay your debt by a court, and it becomes ‘statute barred’.

However, there are some situations where a debt won’t ever become statute barred, for example, if you owe money to Her Majesty’s Revenue and Customs (HMRC). And while it’s good to check if your debt is statute barred, never try to ‘wait out’ a debt in the hope that it will become statute barred, because your creditor will still be able to take you to court if you don’t respond to them.

In this article, we’re going to explore how you can find out if your debt is statute barred, what you should do if you think your debt is statute barred and how to respond to court action on a statute barred debt.

Is my debt statute barred?

Your debt is statute barred if six years has passed since you made a payment or written acknowledgement towards the debt and, for loans under the Consumer Credit Act, six years have passed since your creditor sent you a Default Notice about the debt.

This six year period is known as the ‘limitation period’, which is the time frame in which your creditor can start legal action on your debt. When the limitation period is over, your debt is no longer enforceable, and your creditor cannot take you to court over it.

Let’s look more closely at statute barred debts and how they work.

How to tell if your debt is statute barred

If it has been six years or more since you have made a payment on a debt, your debt could be statute barred and no longer enforceable in court. This means that time has run out for your creditor to take you to court over the debt. However, if you have made any payment or written acknowledgement of the debt in the last six years, the debt will not be statute barred until six years have passed again since the last payment or written acknowledgement. Think of it like a timer that resets to six years every time you pay something towards a debt.

In 2019, the court case Doyle v PRA made it much more difficult for some debts, including credit card debts, to become statute barred. The court ruled that a debt can only become statute barred if six years have passed since your creditor sent you a Default Notice about the debt. This is the notice you get warning you that your account has defaulted, and that further action may be taken, including court action. The person or company taking you to court over a debt has to have a good reason to sue you, and in legal terms, this is called a ’cause of action’. A Default Notice has now become the starting point for a creditor’s ’cause of action’ for unpaid loans that come under the Consumer Credit Act. This means that your creditor could delay sending you a Default Notice as long as they like, until they decide to take court action on a debt, removing any chance of the limitation period passing.

What is the exact date a debt becomes statute barred?

The date that a debt becomes statute barred in England, Wales and Northern Ireland, depends on how long its limitation period is. As we’ve seen, the limitation for most common debts such as unpaid credit card bills, catalogues and personal or payday loans is six years from the date of a creditor sending a Default Notice, if the loan was under the Consumer Credit Act.

However, for Mortgage shortfall debt (which is money you owe to your mortgage or secured loan creditor if your home is not sold enough to pay for your outstanding mortgage or loans secured against your house), the limitation is twelve years for the outstanding balance you owe on your debt, and six years for interest.

For personal injury claims (money you owe if you were responsible for someone else’s injury), the limitation period is three years.

Debts that can never become statute barred include Income tax, VAT and capital gains tax debts owed to HMRC. Also, if your creditor starts court action on the debt before the limitation period is over, the debt can never become statute barred.

While most benefit overpayments can become statute barred, the Welfare Reform Act of 2012 states that overpaid benefits can still be recovered by deduction from current benefits you’re receiving, even if the overpayment is statute barred in the eyes of the court. So, if you were overpaid a benefit over six years ago, you may still receive less of a current benefit until the balance is repaid.

What to do if you think a debt is statute barred

Before court action

If you haven’t heard anything from your creditor and you’re sure that your debt is statute barred, you don’t need to do anything. If you’re being chased for a statute barred debt, you can write to them and explain that you won’t be making any further payment because the debt is no longer enforceable. You can ask them to stop contacting you about the debt, with a phrase such as: “I do not admit liability for this debt”. However, you should not reply to creditors about a potentially statute barred debt before you’ve sought expert debt advice (for example, from the National Debtline), because statute barred debts are a complex issue, and you need to be absolutely sure that the limitation period applies to your particular debt.

If you’re not sure the limitation period has passed for your debt, you can do things like check your bank statements or credit record to see when you last made a payment to a creditor. If you haven’t made a payment to the debt and your creditor hasn’t acknowledged it within six years of sending a default notice about it, the debt is probably statute barred.

If you’re still not sure about whether your debt is statute barred, you can contact your creditor and say you believe the debt is statute barred, and ask them to send proof if they believe otherwise. If they send proof that the debt is within its limitation period, you have to start paying it or face court action.

It’s not a good idea to ignore your creditor if they contact you about a debt you believe is statute barred, because they can go ahead and start court action against you, whether you reply or not. In fact, not replying to them makes it more likely that you’ll get a County Court Judgement (CCJ) from the court ordering you to repay the debt.

After court action

If a creditor starts court action on a statute-barred debt, this gives you a good defence in court. If you can show that the limitation period for the debt is over, the court should reject your creditor’s case, because the debt is not enforceable.

In order to give your defence (that your debt is statute barred), you must fill in any paperwork that you receive from the court about your debt. Simply ignoring contact from the court means that the case will go ahead without the court knowing that your debt isn’t enforceable, and you will get a CCJ or another type of court order (for example a liability order or money judgement), which can force you to pay the debt.

Before a creditor can take you to court, they have to send you these three documents:

  • A default notice. This document should detail the payments you have missed and how long you have to pay. Your creditor has to give you at least two weeks to pay the missed amounts, and they can’t take any further action against you if you do so.
  • A letter of claim (sometimes known as a ‘letter before action’). This is to indicate that they want to start legal action, and should give you 30 days to reply. A letter of claim should come with a ‘reply form’, which you can use to say whether you agree with the debt, disagree with the debt or you need more time to work out whether you owe it. A letter of claim should also include a ‘standard financial statement’, which you can use to make an offer of partial payment.
  • A claim pack. If you and your creditor didn’t come to an agreement on how to repay the debt, they are allowed to start legal action against you. The claim pack should include 4 forms, including a ‘claim form’ telling you how much you owe, a ‘response pack’ where you tell the court you need 4 weeks to prepare a defence if you disagree with the debt an ‘admission form’, where you agree to some or all of the debt and offer to pay and a ‘defence and counterclaim form’, which you can use to defend the claim against you, if you think you don’t owe the debt.

It is so important to reply to a letter of claim or claim pack because it’s your chance to prove that your debt is statute barred and get court action cancelled then and there. It is a lot harder to have to defend your case in court.

If you are sure your debt is statute barred, you can detail this as the reason you don’t owe the debt on your ‘reply form’ to the letter of claim and, later, your response to the claim pack. When you receive a letter of claim, the ‘reply form’ should come with the following boxes:

  • Box A – I agree I owe the debt
  • Box B – I owe some of the debt, but not all of it
  • Box C – I don’t know whether I owe the debt
  • Box D – I dispute the debt

If you’re absolutely sure that your debt is statute barred, you can tick Box D and explain this. If you need more time to work things out, you can tick Box C and request a full statement of your debts from your creditor, to check whether your debt is statute barred.

After you’ve returned your forms to the court with the defence that your debt is statute barred and no longer enforceable, your creditor has to try to prove that it isn’t. For example, they may send copies of payments you’ve made which restart the limitation period for your debt, or provide a credit agreement made less than six years ago. If they can’t prove that the limitation period hasn’t passed, the court will usually dismiss their claim and you won’t be forced to pay the debt.

If your creditor continues to contact you about a debt which a court has found to be statute barred, you can complain to the Financial Ombudsman, who may decide that the creditor hasn’t acted fairly in continuing to pursue the debt.

Can a CCJ be statute barred?

A CCJ can never become statute barred. However, if a creditor hasn’t taken any action as a result of it in six years, for example, they haven’t applied for a charging order against your home (which means that your home can be sold to pay your debt if you continue not to pay), for bailiff action or an attachment of earnings to remove money directly from your wages, they must apply to the court again to enforce the debt.

While a CCJ can’t be statute barred, there are debt solutions that can overturn it or neutralise its effects. For example, if you apply for an Individual Voluntary Arrangement (IVA), which allows you to pay off an affordable percentage of your debt and get the rest written off after 5-6 years, this will usually reverse an CCJ, unless you have a charging order against your home. If you have a Debt Relief Order (DRO) or bankruptcy in place, the CCJ will technically still go ahead, but you won’t have to pay any money as a result of it.

Now that we’ve gone through the State of Limitations for debt in the UK and how you can know whether or not your debt is statute barred, we hope you’ve found this a useful read. Remember to always seek free debt advice, for example, from a debt charity like StepChange before you inform your creditor that you’re not paying a debt that you believe to be statute barred.

Ethan Combes