Limitation Act 1980: when does a debt ‘die’?

“This morning, I got a letter from a credit card company I hadn’t heard from since 2000. I’d forgotten all about it, but they say I owe them £2,200. What do I do?”
Mr X.

If you’re worried about old debts coming back to haunt you, you might like to hear about the Limitation Act 1980.

In Mr X’s case, the Act might mean that he doesn’t have to pay the credit card company anything, IF...

1) the company hasn’t taken court action about the debt, and
2) he hasn’t made any payments in the last 6 years, and
3) he hasn’t acknowledged the debt in the last 6 years.

However...

Unless Mr X can answer “They haven’t” / “I haven’t” to all three, the Act won’t apply.

And even if he can, he can’t just ignore the debt. He needs to take legal advice as soon as possible and find out if the debt is ‘statute barred’. If it is, then he needs to write to the company, informing them that he is disputing he owes the money and citing the relevant part of the Limitation Act 1980.

‘Statute barred’ means the company has missed their opportunity to recover the debt and it officially becomes unenforceable – once he has taken advice and sent them his letter, they’re not allowed to threaten enforcement of the debt. If they do, he can complain to the Office of Fair Trading (OFT) or the local Trading Standards Department.

Please note

1) Most debts can be declared statute barred after 6 years, but:

• it’s 12 years for mortgages and land contracts,
• some debts (e.g. County Court Judgments (CCJs), Income Tax debts, VAT debts, Student Loans, benefit overpayments and social fund loans) are subject to special rules.

2) Like most legislation, the Act is complex and full of legal terms. You should never assume it applies to a debt until you’ve spoken to an expert.
3) Borrowers are obliged to inform their lenders of any change of address.
4) The 6-year (or 12-year) period must be a continuous period.