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The Statute barred is the kind of debt that nobody enforces because the creditor has to recover the debts. This means that there is a certain limit of time until which he or she can apply court action for recovering the debts. Then, after a certain period of time, they cannot recover the debts. Thus, the debt becomes Statute barred

This policy falls under the Limitation Act 1980. This act is not for people to avoid paying their debts. There is no other way of using the Limitations Acts if the debts become Statute barred. Many times the creditor can pursue the non-enforceable debts from different organizations. This is against the law. Moreover, it also helps to know the position for the companies, the place they stand.

If there is no contact between the Creditor and the debtor for a long period of time, the debts become enforceable. Therefore, taking court actions will not help at all. The money that the creditor owns must collect it within the time of 6 years. After six years, they will not get the amount. Within six years, they can take necessary court actions for collecting the debts. 

Benefits of avoiding the Statute Barred Debt:

Thus the complete idea is that if any kind of unsecured debts that a debtor might have with the creditors like a Credit card, overdrafts,  different store cards, bank loans cannot be collected. Within six years, he or she can use the following benefits that are given below:-

  • Anyone that owes a certain amount of the debts in joint names has not paid the necessary amount for the debts for continuous 6 years.
  • The debtor cannot write anything to the creditor about the different debts for the past six years.
  • CCJ action taken against the debtor, by the creditor for recovering all the debts of the last six years.

If the debtor wants to restart the six years’ benefit, he or she must inform the creditor about the debts that they owe or have still left to pay. There are some debts that one cannot place under any Statute Barred Debts. Apart from these debts, all other debts fall under this act. Those are described below with a proper explanation about each of them.

Where Does the Statute Barred Debts not Applicable?

  • Any kind of Shortfalls for Mortgage– If you are an owner of a property and somehow it gets repossessed then, you might be chased by your creditor. This is because of the Mortgage Shortfall. The Mortgage Shortfall falls under these acts after a limited period of 12 years because of any outstanding capital. Also for the areas of interest which is at least of six years.
  • Overpayments of Benefits– Chasing for debts become easy if a person is a debtor to the Department of Work and Function (DWP). The person does not have to visit the Court additionally. The process works like all the overpayments automatically get repaid from all the benefits that the debtor gets currently. When the final decision is done by DWP, council or Tribal the overpayments are given for 6 years of limitation.
  • In the case of Income Tax and VAT– For chasing these kinds of debts, there are no limitations present. HM Revenue And Customs are liable to buy debts that they own. For a period of 6 years, the National Credit will be the main subject.
  • Claims on Personal Injury– The time for the different Personal injury claims are less than Statute barred. The time that they offer is only for three years. 
  • Judgments of the County Courts– If you have already visited the court with your creditor and the County court has given you any kind of Judgement, you are not eligible to use the benefits if the Limitations Act 1980 for disputing the debts. Permission from the court is necessary for the creditor if the judgment crosses six years of time. This is for the enforcement of the existing debts.

Places Where you Can Use the Limitations Act 1980:

Under the Limitations Acts, there are certain conditions for using it. These conditions depend on the different debts that are enforced. The conditions are given below. Follow them accordingly.

  • If there is no registration for the County Court judgments (CCJ) by your creditor against you.
  • Any kinds of debts like Joint Debts, or debts with any other person has not paid the debts for more than six years.
  • Admitting debts is not done by the debtor for the last six to twelve years in writing.

Brief About What is “not enforceable”

The debts do not disappear or written off if it falls under the Statute Barred. The creditor will try to take you to court if your debt is not enforceable. And remember that defending the case will not help you and you would also not get the benefit of CCJ.  If the debt falls under the Statute Barred Debts, then a creditor does not have the permission to chase the debtor. 

This happens when there is no contact between the debtor and creditor for more than 6 years. Regular contact is necessary for the collection of debts. In case the creditor does not have information about the change of the debtor residential address, or the debtor does not respond to any letters does not clarify that the creditor did not try to contact him or her.

As the DWP (Department for Work and Pension) contains different legal powers, creditors use their help. The DWP has the authority to collect money from the wages or take different benefits, by not visiting the court. They can even use this power also after the time span ends.

Things Necessary to do If the Debtor is Chased by the Creditor:

Depending on the different creditor plans, Statute Barred Debt chasing is done. There is no legal permission on chasing for debts as long as the FCA (Financial Conduct Authority) regulates the lender. This rule is applicable under specific court actions. 

During the limited period of time if you get any kind of calls or messages for discussing to take the debtor to the court for Statute Barred Debt. All the debtors need to make them understand his or her debt is no longer enforceable within the laws of the court that stays under the rules and regulation of FCA. The debtor must inform them to nat call them again. 

If the debtor believes that his or her debts are Statute Barred, then they will have to write any letter to their creditor regarding the debt that they owe.

Is it necessary to pay the Debt?

Though the FCA regulations help the debtor from the action of the court within six years of time, it does not state that he or she does not have to pay the debts.  Creditors have the right to collect debts through the debts are not enforceable by the laws of the court. They can even collect the debts by another process like Debt collectors.

One must clear all his or her debts, to avoid any legal actions from the court. They can also avoid chasing the creditors, by paying all their debt at the correct time. Else the creditors will try to take to the court for not paying the debts and can make things worse.

What is the Effect of the Statute Barred Debt on the Credit File?

The Statute barred Debt has nothing to do with the credit file of the debtor. But there can be some negative marking of the account linked with the credit file. If by chance a credit company looks through the credit files for collecting any Statute barred Debt, then it can affect the credit score as well. Try to avoid these and mark it as a precaution. 

A bad credit score does not allow you to take loans. The lenders who provide you money check the credit score on the first hand and then they approve for the loan. So, it is necessary to keep the score high. Improving the credit score is very easy. All you have to do is pay the installments and debts at the correct time.

Format for the Statute Barred Debt Letter

There is a specific format for writing letters to the creditors on Statute Barred Debts. Depending on the type of debt, the format changes accordingly. Check the different points for writing the letter. Follow the format accordingly as it is given below:-

  • The first and foremost thing that is necessary for you to do is to collect a copy of the Credit File. This copy should be attached to the letter.
  • Now, write a letter in the official format to your creditor. You can also search for the templates on the internet. Just copy then and add your details there. Now, deliver the letter from a courier service and check if the letter is successfully delivered or not.
  • Make sure to check if the limited time of 6 or 12 years is still left. As soon as you complete all the payments at the correct time, then the countdown of 6 years or 12 years starts again.
  • You can then file a complaint to the Financial Ombudsman if you face any kind of chasing without any proof. They will then take necessary actions against the creditor. First, try to make your creditor understand the problems, and if that does not work then only visit the Ombudsman.

If any debt is Statute Barred, then it does not mean that there is no other method for paying that debt. If you are aware that you have to pay the debt, but by some circumstance, the payment is not complete, then the creditors will help you with paying those debts.

Limitation Period

The limitation starts whenever you have completed the last payment of the debt. From there the counting starts for 6 years or maybe 12 years. This depends on the acknowledging letter that the debtor must send to the creditor. The letter must have a signature of the debtor at the end with the correct date. 

Many times, the email is also considered as an acknowledgment letter. In case if the debtor contains debts on joint names, then the creditor accepts the acknowledgment letter on the signature of any one of the debt holders. 

In case there are any letters sent on behalf of the debtor to his or her creditor,  those which work on the behalf of the creditor are also considered as an acknowledgment letter. Different Debt management Companies or Advice agencies send these letters to the creditor.

There are some points that are to be noted. Creditors do not accept these as an appropriate letter for acknowledgment. Check these before writing any acknowledgment letter to the creditor.

  • Letter that states that there are no debts that one owes from the creditors.
  • A letter to you from your creditor.
  • Do not just talk with your creditor over the phone. Positively send a letter to your creditor.

How does the Payment Process Work for the Debts?

If someone has certain debts on joint names, then payment form any one of them will consider as a payment. After the payment of the specific debts, the Limitation period will start automatically. So, if the debtor is paying through any debt management company, then that also counts.

Things that a Creditor Can Do After the Limited Period Expires

After completion of the limited period, if still, you pay the debt then also it does not start again. According to FCA, creditors will not always call and ask for payment of the Statute Barred Debts

One does not have to pay the debts if the regulation is done by FCA. They must immediately stop contacting you. Many common consumer debts fall under this like store cards, credit cards, loans from payday, personal loans, catalogues and also overdrafts.


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