When does the limitation period start?
The start date of the limitation period is whichever of the following happened most recently:
The last time you wrote to the creditor acknowledging that you owed the debt
This needs to be a signed letter from you to the creditor. In some cases an email can also count as written acknowledgment.
If you have a debt in joint names, written acknowledgment only counts for the person who signed the letter.
A letter from a third party sent with your permission by someone who is acting on your behalf also counts as written acknowledgment. This includes letters sent by advice agencies or debt management companies.
The following do not count as written acknowledgement of a debt:
- A letter from you to the creditor clearly stating you don’t owe the debt
- A letter from the creditor to you
- Speaking to a creditor over the phone
The last time you made a payment to the debt
If the debt is in joint names, a payment by either person will count as the start of the limitation period for both people named on the account. A payment to the creditor by a debt management company or advice agency acting on your behalf will also count.
The earliest date the creditor could have started court action to recover the debt
This will vary depending on the type of debt. For most common consumer debts such as personal loans, credit or store cards, catalogues or payday loans, this will be the date your account defaults. This is normally 14 days after you are sent a default notice warning you to bring your account up to date.
It was previously understood that the limitation was based on the earliest date the account could have defaulted, regardless of when the default notice was issued.
This is no longer the case, following a Court of Appeal ruling which confirmed a debt becomes statute-barred six years (or five in Scotland) after the default notice expires.
For example, if you live in England and the account was defaulted on 1 January 2015 and your debt has a six year limitation period (under the Consumer Credit Act), it will become statute-barred from 1 January 2021.
For other debt types, the earliest date court action could have been started can be harder to work out, so contact us if you have need help with this.
To work out when a debt becomes statute-barred or extinguished, take whichever of these events happened most recently and add the limitation period.
For example, if you live in Wales and the most recent of these events was a payment you made on 1 January 2015 and your debt has a six year limitation period, it will become statute-barred from 1 January 2021.
If a creditor has already started court action before the end of the limitation period, this doesn’t apply – the debt will never become statute-barred or extinguished.