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Limitation Act 1980: How it Relates to Your Debt

Limitation Act 1980: How it Relates to Your Debt

Maxine McCreadie


The Limitation Act 1980 is a part of UK law that covers time limits for how long a person or company can start legal proceedings to recover money that they are owed.

If you do a quick search and read the legal text that relates to the act, you’ll quickly realise it covers a range of topics – from personal injury claims to debt.

This makes it difficult to pinpoint exactly how the rules apply to money that you might owe.

With this in mind, we’ve put together a guide that explains everything you need to know about the Limitation Act 1980 and how it relates to your debts. We’ll cover:

  • What the Limitation Act 1980 is
  • How the limitation periods work
  • What kinds of debts are and aren’t covered by the act
  • What to do if you’re dealing with a very old debt

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What is the Limitation Act 1980?

The Limitation Act is a piece of legislation that applies in England and Wales. It became part of the law in 1980.

It’s a type of law called a ‘statute of limitations’ – this means it puts a limit on how long a certain law can be applied.

In this case, it’s designed to put a time limit on how long creditors (people or companies you owe money to) can take legal action to get back the money you owe them.

Generally speaking, this limit is 6 years. After this time, any debt covered by this law is referred to as ‘statute barred’.

There are some in-depth rules around when this 6-year period begins – and which debts it does and doesn’t apply to.

When does the 6-year limitation period start?

A lot of people think that the 6-year time limit begins when you first sign up for credit – but this isn’t the case.

Instead, the law states that the 6-year limit begins when you last made a payment towards the debt or last admitted owing the money.

For example, if you last made a credit card payment 4 years ago, and you haven’t admitted owing the credit card provider any money since then, the limitation period will be over in another 2 years.

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What happens with the time limit passes?

The law says that when the limitation period passes, the money is still owed but cannot be enforced by law.

At this stage, the creditor cannot take any legal action to get the money back – so they can’t take you to court or submit a claim form to apply for a County Court Judgment. Since the debt is old and there is nothing that can be done legally, most creditors will write the debt off and stop chasing you.

Which debts are covered by the Limitation Act 1980?

Only certain outstanding debts are covered by the ordinary time limits of the Limitation Act.

As such, it’s a good idea to look at what you owe and see how the limitation act applies to that debt.

Unsecured debt

The term ‘unsecured debt’ applies to any credit you have that’s not tied to something you own. For example:

  • Personal loans
  • Overdrafts
  • Mobile phone bills
  • Rent arrears
  • Credit card debt
  • Payday loans
  • Store cards

The 6-year limitation period applies to these debts – so assuming you haven’t made a payment or admitted to the creditor that you owe the money in the last 6 years, they will be written off.

Council tax

In theory, the 6-year limitation period does apply to council tax – although, in practice, it usually won’t ever become ‘statute barred’.

This is because councils are usually quick to take legal action against you if you don’t pay what you owe.

This will often result in a County Court Judgment (CCJ) that demands you make payment. If you ignore a CCJ, the council will go back to the court and ask for a liability order which will mean the debt is recovered directly from your wages or benefits payments.

Benefits overpayments

Since the benefits system is usually based on last year’s income information, it’s not at all uncommon for people to be overpaid.

This usually happens because information is out of date, a mistake is made, or – occasionally – a fraudulent claim is made.

Again, in theory, the 6-year limitation period applies to this kind of debt. However, HMRC or the DWP will have almost certainly taken action to recover the debt long before this point. They can do this by recovering the money directly from future benefits payments.

County Court Judgment

If you can’t or don’t make repayments towards a debt and you don’t come to another arrangement with a creditor, they will often apply for a CCJ – a court order that demands you repay what you owe.

If a court order is issued, the Limitation Act 1980 no longer applies, so the debt will not be written off, not even after 6 years.

That said, if the CCJ is more than 6 years old and the debt is still not settled, the creditor might need to re-apply to the court if they want to take further action to collect the money.

Income tax and VAT

There are lots of different debts that could be owed to HMRC, including:

  • Income tax
  • National insurance contributions
  • Capital gains tax
  • Inheritance tax
  • VAT

The Limitation Act 1980 does not apply to money owed to HMRC. Therefore, you can expect them to chase the debt until it’s paid in full.

Mortgage shortfalls

Mortgage shortfalls happen very rarely – but they’re considered different for limitation purposes, so it’s worth looking at these in a little more detail.

If a property you own has been repossessed by the mortgage provider, it will be sold so they can recover the money that they’re owed.

Occasionally, a property will sell for less than the amount owed. The difference between what the property sells for and what you owe is referred to as a ‘mortgage shortfall’.

If you find yourself in this situation, the Limitation Act 1980 sets out different timescales. Rather than 6 years – a mortgage provider can attempt to legally recover this money for 12 years.

What does the law say about when limitation periods begin?

We mentioned above about when limitation periods are measured from – but it’s a good idea to take a detailed look at every fact relevant to these starting dates to make sure there’s no confusion.

Here are the questions you need to ask yourself to understand when a limitation period will have begun:

When did I last confirm I owed the debt?

If you’ve communicated with your creditor and confirmed that you owe the debt, this is legal proof that the money is owed and the debt is correct.

This is why it’s always important to make notes about any communication you have relating to a debt.

A confirmation that you owe money would usually be in letter form. However, creditors could potentially use audio calls, emails, or even online customer service chat records as proof that you owe money.

Whenever you last confirmed with your creditor that you owed them money is the time the limitation period begins.

Don’t forget, the date is no set-in-stone at this stage – so even if you’re 5 years into a 6-year limitation period, confirming the debt in writing will reset this limitation period, and you’ll have another 6 years to wait.

When did I last make a payment towards the debt?

Another way to confirm that a debt is valid is to make a payment towards that debt. From a legal standpoint, you would only be making the payment if you had carried out reasonable diligence and believed the debt to be legitimate.

Therefore, it’s a good idea to look back over financial documents (bank statements, credit card statements, etc) and find out when you last made a payment towards the debt.

The limitation period will start from this date. Again though, any subsequent payment will restart the limitation time limits, so even a small payment towards the outstanding amount will restart the 6-year clock.

What should you do if you’re contacted about a statute-barred debt?

Occasionally, creditors or debt collection agencies working for those creditors might get in touch to chase up what you owe.

Remember, although there is no legal action they can take, they may still try to come to some kind of agreement with you, making it sound like there are consequences if you don’t settle a now statute-barred debt.

They won’t talk about taking you to court, instead, they may discuss alternative dispute resolution options – such as setting up a payment plan.

At this stage, you should make sure you do not admit to owing the money and do not make any payment or agree to any payment plan.

In some cases, if you admit to owing the debt or you make a payment – even after the 6 years has passed – the creditor or their agent can start legal proceedings to try to recover the money.

Instead, you should tell the person you’re talking to that you’ll contact them in writing – and, when you do, quote the Limitation Act 1980.

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What should I do if a creditor keeps contacting me about a statute-barred debt?

There have been cases where creditors have continued to contact people about statute barred debts even though they have been told they will not be paid.

If this happens to you, you might want to write again to the creditor and explain that you will speak to Citizen’s Advice or a solicitor about Section 40 (1) of the Administration of Justice Act 1970 – covering the “unlawful harassment of debtors”.

The text in this act is complicated, but it explains that It’s illegal to repeatedly ask the other person for payment in a way that is intended to scare, upset, or embarrass them.

This could include making demands too frequently or at inappropriate times.

Since the debt they are contacting you about is over 6 years old (and possibly much older), it might be considered inappropriate for them to demand repayment – especially if it is done frequently.

Should I try to wait for these 6 years to pass to avoid repayment?

The idea of any debt becoming unenforceable and therefore written off is appealing to most people – especially if you’re sick of getting calls from debt recovery agents and late-payment teams.

No matter how appealing it sounds to sit it out with a company and wait for a debt to become statute-barred, it’s almost always going to be incredibly stressful.

What’s more, you may find that they move on to commence proceedings to get a CCJ against you – making the wait pointless anyway.

Remember, no company is going to let someone write money off easily.

They will make every effort they can to get the money back – including using debt collection agencies, court orders, and potentially even bailiffs.

As this debt collection process goes on, you’ll find your credit rating reduces as they take more action against you.

This can make it difficult or sometimes impossible to get any kind of credit during this time.

So, if you’re considering trying to wait out a 6-year limitation period, you’re likely to do your finances a lot of damage.

What’s more, the strategy is unlikely to work – as a creditor could take you to court at any time and have a CCJ issued against you that overrules the Limitation Act 1980.

Limitation Act 1980: An overview

Hopefully, this guide has explained what you need to know about the Limitation Act 1980 and how it relates to personal debt.

If you’re someone who has a very old debt that you’ve just been contacted about, the Limitation Act could help you to understand whether or not you are still legally bound by what you owe.

However, if you are wondering about the Limitation Act because you’re considering ignoring a debt and hoping it will go away in 6 years – you might be disappointed by what you have read. Creditors are well aware of the time limits laid out by the act – so they’ll work hard to make sure you cannot simply walk away from what you owe.

Please remember, although this blog talks about a legal matter, it does not constitute legal advice – so it’s important to remember to seek expert advice if you’re dealing with an issue relating to the Limitation Act 1980.

Maxine McCreadie
Maxine McCreadie

Maxine is an experienced writer, specialising in personal insolvency. With a wealth of experience in the finance industry, she has written extensively on the subject of Individual Voluntary Arrangements, Protected Trust Deed's, and various other debt solutions.

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