Statute-Barred Debts: When You No Longer Have to Pay

The Limitation Act 1980 sets time limits for bringing legal action. For most consumer debts:

• Section 5 — actions on a simple contract: 6 years from the cause of action.
• Section 8 — actions on a specialty (deed): 12 years.
• Section 9 — actions to recover sums under statute: 6 years.
• Section 20 — actions to recover the principal of a mortgage debt: 12 years for principal, 6 years for interest.
• Section 24 — actions on a judgment: 6 years (but the judgment debt itself is enforceable for 12 years before re-enforcement is needed).

The "cause of action" for a credit card or personal loan is the date the debt became due — usually the date of the last missed payment or the date the account was defaulted by the lender. The 6-year clock starts running from that date.

Two things restart the limitation period:

• Payment — any payment on the debt, however small. A token £1 payment resets the clock to a fresh 6 years.
• Written acknowledgement — section 29(5) and section 30 of the Limitation Act. You must acknowledge in writing, signed (or electronically signed) by you, that you owe the debt. A casual email mentioning the debt may or may not count depending on wording.

What does NOT reset the clock:

• The creditor sending you a letter (their action does not affect limitation).
• You phoning the creditor to deny the debt (the call is not "written").
• You phoning to ask for information about the debt (not acknowledgement of liability).
• The debt being sold to a debt purchaser (the new owner takes the debt subject to whatever limitation has run).
• A default appearing on your credit file (the file entry is the lender's action, not yours).

So if you are sure the debt is over 6 years old and you have not paid or written to acknowledge it, the debt is statute-barred. If you are unsure, do not make any payment or sign any letter until you have checked.

Three categories that work differently:

• Mortgages: 12 years for the principal under section 20. After repossession, a shortfall debt is still enforceable for 12 years from the sale completion. Many lenders chase shortfalls right up to year 12.
• Council tax: 6 years if no Liability Order obtained. But once a Liability Order is made (and these are obtained by councils within months of non-payment), no limitation applies — councils can enforce the order indefinitely.
• Joint debts: limitation runs separately for each debtor. If your spouse acknowledged the debt 4 years ago but you have not, the debt may be statute-barred against you but not against them.
• Benefit overpayments: previously no limitation under the Limitation Act because the debt is a sum due under statute (section 9), but the Court of Appeal in Skipton Building Society v Vyas confirmed that section 9 applies, giving 6 years.
• HMRC tax debts: special rules under the Taxes Management Act 1970 — HMRC can collect taxes for 4 years after the year-end in normal cases, longer with fraud or careless behaviour.
• Court judgments (CCJs): the judgment can be enforced for 6 years; after that, the creditor must apply for permission to enforce. The underlying debt is also subject to a 12-year overall limitation.

If a debt collector contacts you about an old debt:

1. Do not pay anything — even a token payment resets the clock.
2. Do not acknowledge the debt in writing. Specifically, do not say "I owe this money but cannot pay" — that admission resets the clock.
3. Send a prove it letter — formally request that the creditor produces the original credit agreement (under section 77/78 Consumer Credit Act 1974, with a £1 fee for most consumer credit). If they cannot produce it, the debt may be unenforceable for that reason too.
4. If the debt is over 6 years old and you have not paid or acknowledged in that time, write to the creditor stating: "I do not acknowledge this debt. It is statute-barred under section 5 of the Limitation Act 1980. Please cease all collection activity."
5. If they continue to chase, that may breach FCA CONC 7 (harassment of debtors) or the Financial Conduct Authority rules. Complain to the FCA and/or the Financial Ombudsman Service.

If they have already issued court proceedings, file a Defence (Form N9B) raising the Limitation Act defence. The court will strike out the claim if the limitation has run.

Five things to know:

• Check your credit file — a default that is over 6 years old should have dropped off automatically. If it is still showing, complain to the credit reference agency.
• Debt purchasers often chase statute-barred debts. They buy old debts cheaply, hoping you will pay or acknowledge. Resist.
• Living abroad pauses the clock for some debts — section 32A. If the debtor was outside the jurisdiction for a period, the clock may not have run.
• Fraud or concealment extends the clock — section 32 — but only if the creditor concealed the cause of action.
• Bankruptcy and IVAs deal with all debts together — including statute-barred ones. If you are considering bankruptcy, do not pay off a statute-barred debt thinking it will help; it just means more money to the creditor and no benefit to you.