Under the Statute of Limitations most unsecured debt becomes statute barred after 6 years. However some debts can be enforced after this.
- When does a debt become statute barred?
- Are any debts enforceable after 6 years?
- Which debts are never statute barred?
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If you live in Scotland the rules about when debt becomes statute barred are different.
When does a Debt become Statute Barred?
Generally speaking an unsecured debt becomes statute barred and unenforceable after 6 years if the following rules can be applied:
1. The creditor has not already obtained a CCJ against you and
2. You have not made a payment towards the debt during the last six years and
3. You have not written to the creditor admitting you owe the debt during the last six years.
It is not just bank debts such as credit cards and loans what become unenforceable. It is also the case for other debts such as council tax and rent arrears.
A council is not allowed to take enforcement action to collect an outstanding council tax debt if it becomes statue barred. However they are likely to take action before the 6 year threashold.
If you do not agree a suitable plan with the council to repay arrears they are likely to apply for a Liability Order against you. This could result in Bailiff action or even a prison sentence.
Are any debts Enforceable after 6 Years?
There are some types of debts which do not become statute barred at the 6th year anniversary. The most common of these is a mortgage or secured loan shortfall which is only statute barred after 12 years.
Benefit overpayments are caught by the Statute of Limitations after 6 years. This includes overpayments of income support, job seekers allowance, pension credits, housing benefit, council tax benefit and social fund loans.
Having said that even if benefit overpayments becomes unenforceable they can still be recovered by withholding future benefit entitlements.
DWP can still make deductions from ongoing benefit entitlements to repay a debt which is over 6 years old because they do not need to go to court to do this.
Which debts are never Statute Barred?
In England & Wales there are a few exceptions to the 6 year rule. The following debts never become statute barred:
Income Tax and VAT Debt
There is no time limit for recovery of HMRC debts such as tax or VAT owed and any related interest. As such these debts cannot become unenforceable.
National Insurance is not classed as a tax and is therefore subject to a six year limitation period.
Generally speaking for CSA debts incurred after July 2006 the Statute of Limitations does not apply.
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