What is a statute barred debt?

Statute barred means that a debt has been barred under statute. I.e. the creditor has run out of time to collect the debt through the courts. Many people who have old debts believe that they do not have to pay any more, but the truth is that creditors can in some cases still take action, even for a statute barred debt. In most cases, the law in England and Wales stipulates that a creditor has a certain amount of time to start court action to recover a debt. This means that if you wait too long, you may not be able to recover the money you are owed through the court, which means that the debt has become statute barred.

What Happens If You Wait Too Long to Collect a Debt?

If you wait too long to take action as a creditor, that debt will eventually become statute barred. For most types of debt, the limitation period is six years in England, Wales and Northern Ireland. This period applies to the vast majority of debt types, such as personal loans, credit or store cards, gas and electric arrears, benefits overpayment, council tax arrears, payday loans, catalogues, overdrafts, and more.

There are some exceptions to this though, which include mortgage shortfalls, Income Tax, VAT, Capital Gains Tax as well as personal injury claims. There is a longer limitation period for the money you borrowed as capital for your mortgage, standing at 12 years, and a shorter limitation period of three years for personal injury claims. Debts which are owed to HM Revenue & Customs will not become statute barred as there is no time limit for HMRC to recover these debts.

If you, as a creditor, have already obtained a court judgment before the limitation period passed, it means that the debt will never become statute-barred and you can employ the services of an enforcement agency such as Able Investigations.

How Can You Recover a Statute Barred Debt?

Statute barred debts in England and Wales remain in place, and the debtor still owes the money, unlike in Scotland, where the debt simply goes away. For a debt to be statute barred, the person who owes you money cannot have made contact with you within a six-year period, and must not have made a payment on their debt during said period. As a rule of thumb, you cannot get a court judgment for a statute-barred debt, but there are still a couple of options to consider before writing off your money for good.

Even though a debt is statute barred, it does not actually mean that the person who owes you money cannot or will not make repayments. In some cases, you may be able to recover some of the arrears by arranging a settlement with the debtor. (This does not apply if the debt is regulated by the Financial Conduct Authority or FCA).

For the best chance of recovering any money that you may be owed, employing the services of an enforcement agency such as Able Investigations can be of tremendous help. So, if you would like assistance with recovering any type of long term debts, we are here to support you in your efforts.

Our team at Able Investigations has over 20 years’ experience in helping businesses or individuals to recover long term debts they are owed. If you are unsure whether your debt is in fact statute barred or for more information on how we can help you to recover a long term or even statute barred debt, give our highly experienced team a call on 0845 370 7401 or fill out our contact form.

Comments are closed.