If you have debt, you might be wondering how long a creditor (the person or company you owe money to) can legally chase you for the money owed.
This is a fairly common question amongst people dealing with debt but with so much information out there, it can be difficult to get a straightforward answer.
In this guide, we’ll explain everything you need to know, from how long you can be chased for a debt in the UK to what happens if you are being chased for a debt after the time limit and, finally, how the debt collection process works.
How long can a debt be chased UK?
In England, Wales and Northern Ireland you can be chased for a debt for a total of six years (the limitation period) until it becomes statute barred (unenforceable).
This is in accordance with the Limitation Act 1980 which sets out how long a creditor has to take legal action against the debts they are owed.
In Scotland, you can be chased for a debt for a total of five years (the prescription period) before it becomes prescribed under the Prescription and Limitation (Scotland) Act 1973.
However, it’s important to note that, during this time, debt collection proceedings can still be brought against you and your creditor might take you to court to order you to pay the money back which, if ignored, could result in bailiff action.
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What debts are included in the time limit?
The time limit within which you can be chased for outstanding debt by creditors or debt collectors applies to most unsecured debts. This includes:
- Council tax arrears
- Utility arrears
- Personal loans
- Credit cards
- Catalogue repayments
- Payday loans
- Overdrafts
- Benefit overpayments
- Store cards
However, there are some exceptions to the types of debt that are covered by the time limit and it’s important you know how long your debt can be chased by a creditor before it becomes legally unenforceable.
What are the exceptions to the time limit?
In the UK, the time limit for being chased for a debt is longer for secured debts, such as mortgage shortfalls.
In England, Wales and Northern Ireland, for example, you can be chased for the money you borrowed for your mortgage (the capital) for 12 years and the interest charged on this amount for six years.
In Scotland, on the other hand, you can be chased for the money you borrowed for your mortgage for 20 years and the interest charged on this amount for five years.
However, it’s important to note that, if your creditor has taken court action against you, such as issuing you with a County Court Judgment (CCJ), a time limit does not apply, and your debts cannot legally become statute barred or prescribed.
If your CCJ was issued more than six years ago and your creditor wants to take legal action against you, they must seek permission from the court before they are able to do so.
Furthermore, income tax, VAT and capital gains tax debts owed to HM Revenue & Customs don’t have a time limit in the UK, meaning they can’t become statute barred debts and HMRC can still take you to court regardless of how long the debts have been outstanding.
When does the time limit start and end?
If you have had debt for a number of years, you might be wondering when the time limit started and, therefore, how long you have to wait until it becomes statute barred.
However, this can differ depending on the type of debt you have and when you last acknowledged it.
In most cases, the time limit won’t start when you sign a credit agreement but on the ’cause of action’ or, in other words, when your agreement states the creditor is able to take action against you.
So, put simply, the time limit will be valid, and your debt will become statute barred after the limitation or prescription period expires if the following conditions have been met:
- You haven’t acknowledged or admitted to owing the debt
- You haven’t made a payment towards the debt
What happens if I am being chased for a debt after the time limit?
If the last contact with your creditor – whether a letter, phone call or payment – happened after the time limit ran out, you are no longer required to repay the debt.
This, essentially, means your creditors are no longer able to contact you, pursue you for further payment or take legal action against you.
However, whilst the debt is statute barred, it doesn’t disappear. This means you won’t be able to claim back any payments because, technically, you still owe the debt.
If you are still being chased for statute barred debt and you don’t have a CCJ in your name, you are within your right to report the creditor for harassment and, if necessary, make a complaint to the Financial Conduct Authority (FCA) but you must be prepared to prove that the limitation period has passed by filling in and returning any relevant paperwork that could give you a defence.
However, if the creditor can provide proof of payment or copies of letters that confirms the debt is still active, you will be liable to pay the debt and court action can still be brought against you.
Should I wait for the debt to be written off?
If you’re nearing the end of your time limit and your creditor isn’t actively trying to recover the money owed, you might be tempted to just do nothing and wait for the debt to be written off.
However, in most cases, your creditor will try everything in their power to get the money they are owed before the time limit passes and it becomes unrecoverable.
This could be in the form of non-stop phone calls, visits and letters which, over time, could have a negative impact on your mental health and wellbeing.
It’s also worth remembering that your creditor can still take legal action against you up to the date the time limit passes, and this can prevent your debts from becoming statute barred or prescribed, meaning you are still legally obliged to pay the money owed, even after the time limit has passed.
If you are being chased for a debt, there are various debt solutions out there that can help you fully or partially repay the money you owe and, more importantly, put a stop to further communication or legal action from your creditors.
How long does debt stay on my credit file?
If you are being chased for a missed or late payment, it will appear on your credit file for six years which can lower your credit score for years to come.
However, it’s worth remembering that the six-year time limit for stature barred debt is not the same six-year time limit for debt to remain on your credit file.
For example, whilst a debt can disappear from your credit file after six years, it won’t become statute barred or prescribed if you acknowledged it or made a payment during this time – even if you just repaid £1.
Can I be taken to court by a creditor?
In some instances, your creditor might take you to court to ensure they are paid the money they are owed by whatever means necessary.
This could result in you facing a CCJ which will appear on your credit file for six years and have a negative impact on your ability to get credit, such as a mortgage or even a phone contract, for years to come.
However, this course of action is usually only taken if all other avenues have been exhausted and you should always be given plenty of opportunities to repay your debt through alternative means before your case is escalated to court.
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How does the debt collection process work?
Whilst not every debt collector will follow the same set of steps or stick to the same timeline, the debt collection process is, generally, the same and you will be given multiple chances to pay your debt in a way that suits both parties before it becomes statute barred.
If you have missed payments and are being chased for the money owed, this is a rough guide of what you can expect to happen:
First reminder
You will always be given a chance to make up for a missed payment as soon as it happens in the event that it was a genuine mistake.
This will usually be in the form of a friendly letter asking you to pay the money owed to your creditor within a specified timeframe.
Overdue reminder
If you have been given a chance to make up for a missed payment but haven’t acknowledged the correspondence or made a payment, you will be given what is known as an overdue reminder. At this stage, the missed payment may be added to your credit file which can prevent you from getting credit for up to six years.
Final notice
If a couple of weeks have passed since your missed payment was due and you have been given several reminders, your creditor will be keen to get paid the money they are owed, and you will be served with a final notice.
Direct contact
At this stage, you will have been given multiple opportunities to come to an agreement over how to repay your debts and you might start to receive direct calls or letters from your creditors demanding payment for the money they are owed.
Default notice
If you have ignored all communication up to this point, you will be served with a default notice.
This is a formal letter stating that you have 14 days to make a payment before your creditor escalates your case and takes legal action against you.
If you make a payment within this period, your creditor will be stopped from taking further action against you but if you can’t pay the arrears, the default notice will expire, and your creditor will be free to take further action against you.
Debt collection
If you have ignored direct contact from your creditor and failed to respond to a default notice, they may feel compelled to recover the debt through a debt collection agency who will take over and start chasing you for payment.
You might be able to negotiate an affordable payment plan at this stage, but this will depend on the situation and whether the debt collection agency believes you are likely to cooperate.
Court action
If court action has been brought against you, you’ll receive a formal letter (usually from your creditor’s solicitor) informing you of what you can expect to happen next.
It will include information on the total amount you owe, how it should be paid as well as when you need to pay it by.
Bailiff action
The final stage of the debt collection process is bailiffs being sent to your property to recover goods that equal the value of your debts.
This will happen when you have been served with court action but have decided to ignore or not comply with the ruling.
At this stage, there is also a good chance that further costs and interest will have been added with some bailiffs charging you just for contacting or visiting you, increasing the total amount of money you owe.
However, the length of time it takes from a missed payment to bailiff action is usually more than six months and, during this time, you will have had substantial notice and been given multiple opportunities to repay your debt or negotiate a suitable payment plan that both parties agree upon.
