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The Limitations Act and Statute-Barred Explained

The Limitation Act 1980 is a British Act of Parliament that’s applicable in England and Wales and provides definitive timescales within which action may be taken for breaches of the law.  In most cases, after the expiry of the time period specified by the Act, the remedies available for breaches are extinguished and no action may be taken in the courts in respect of those breaches.  The Limitation Act sets out clear rules on how long a creditor has to take action against a debtor to recover the debt, however, these time limits don’t apply to all types of recovery action and the time limits differ depending on the type of debt. 

The Act is not there to encourage debt avoidance or non-payment and courts will take a dim view of this tactic as the Act is designed to protect people from being forced to pay debts that have timed out through no fault of their own.  While the Act does apply to most unsecured debts, the debt doesn’t disappear or get written off but the Act means that the creditor can no longer enforce the debt through the court system.

If a debt is barred under statute it means the lender has run out of time to use certain actions to enforce payment of the debt.  However, statute-barred does not mean that the debt no longer exists and in some circumstances, the creditor (or a debt collection agency) can still try to recover the money.

Under the Limitation Act, simple contract debts (credit cards, store cards, personal loans and catalogue debts) the limitation period is six years.  The Cause of Action (when the limitation period begins) for these simple contract debts usually begins when the agreement says the creditor is able to take action because the debtor has fallen behind with payments.  This is usually after one or two missed payments, but in some cases a debt will not have a set repayment schedule.  In these cases, working out the Cause of Action is more complicated.

A simple contract debt will usually be statute-barred if the following applies:

  • The creditor has not already obtained a county court judgement (CCJ)
  • The debtor has not made a payment towards the debt during the last six years
  • The debtor has not contacted the creditor admitting to the debt during the last six years.

If you are contacted about a debt that’s a simple contract debt and you think it may be statute-barred, then write to the creditor telling them about the Limitation Act and keep a copy of the letter.  If you have such a debt and you haven’t been contacted about it, you could choose to ignore it.  However, it’s often the case that a debt will reappear out of the blue. 

If you’ve made payments towards a debt where the limitation period of six years has already passed and no court action has been taken, the debt is probably unenforceable.  In cases of unpaid past debts, you should check if any court action has been taken as this may mean that the time limits don’t apply and you could face enforcement action.