When it comes to debt issues, there are various questions on the minds of people trying to get out of debt, however one major question that plagues people suffering under crushing debt is the issue of “how long can people in debt be chased for repayment?” – This is a good question with a nuanced answer, hopefully after reading this page it will become much clearer, if this is you wondering about this issue, please read on.
How Long Can Creditors Chase Up Debt Repayment?
Firstly, creditors chase debts legally provided the debt is within what is known as the ‘six year time limit’, this is the statutory time limit the law stipulates for all debts to be legally enforced.
If the creditor does not successfully ‘call in’ debt repayments (or file a ‘CCJ’ County Court Judgement) within that six year timescale (and it is six years since receiving a repayment from the debtor OR a written acknowledgement of the debt) then the debt can be considered ‘statute barred’ and this not only renders the creditor unable to pursue the debt through the courts, but it also legally indemnifies the debtor from all responsibility to repay the debt itself.
For an in-depth guide on ‘How long can I be chased for debts’ see this page for further information.
How Does This ‘Statute Barring’ Work?
Because of the limitations act 1980 which stipulates that creditors have a maximum of six years from the last written acknowledgement or payment of debt from which to pursue legal action or enforcement of the debt. (If you live in Scotland it’s only 5 years not 6).
It provides a contribution to British law that protects the debtor from being chased beyond the time limit (6 years).
It is written into British law and has been an item of legislation since the year 1980, so creditors will be well aware of the rules surrounding the pursuit of debt and the statutory application of such laws which in many cases benefits the debtor (so long as they have had debts’ pending and that meet the criteria mentioned).
What If I Have Debts’ That Are Not ‘Statute Barred’?
Debts that are not barred under statutory law can be dealt with in other ways, below there are three different ways you can deal with them:
A) The Manual Approach – this would be where you call each of your creditors individually and negotiate a payment plan that works for you (making sure it is affordable for you with reduced repayments).
B) Making Use Of A Debt management plan (DMP) – this involves taking up the informal ‘debt management plan’ which enables people struggling with repayments to pay their liabilities in a much more manageable way (with significantly reduced monthly payments).
C) Using an ‘Individual voluntary arrangement’ (IVA for short) as a formal arrangement over the course of 5 years to repay your debts, with any remaining liability wiped off after the 5 year period, the IVA can significantly reduce repayments, freeze interest and charges and actually ‘write off’ the majority of debt, leaving you debt free and enabling you to keep hold of your assets and avoid bankruptcy.
If you have unsecured debts that are not expired one recommended debt solution (mentioned above) would be the IVA, there are a range of advantages and disadvantages of the IVA as a debt solution, to find out more about ‘IVA pros and cons see this page’ for more information.
What Types Of Debts Don’t Become Barred In Six Years?
Mortgage shortfalls (these have a longer period of 20 years to become barred)
Council tax and income tax debts (longer period of 12 years)
Personal injury claims (this is only three years)
Guarantor loans (these don’t become barred)
Generally most unsecured personal debts become statute barred after six years.
If you are unsure you can check with your local citizens advice or national debtline.