What can a creditor do after the limitation period has passed?
Once a debt has become statute-barred or prescribed it can’t be restarted even if you make a payment to it.
The Financial Conduct Authority (FCA) say that it’s not fair for a creditor to keep asking you to pay a statute-barred or prescribed debt if you’ve told them you don’t intend to pay it.
This means for debts which are regulated by the FCA, once you’ve shown the limitation period has passed and told them you won’t be paying the debt, they should stop contacting you. This applies to many common types of consumer debt such as credit or store cards, payday loans, personal loans, overdrafts and catalogues.
Other possible actions a creditor can vary depending where you live in the UK:
England, Wales or Northern Ireland
Once a debt is statute-barred, the creditor will no longer be to get a CCJ or money judgment, and they won’t be able to make you bankrupt.
However, as the debt still legally exists the creditor could contact you to ask for payment, if the creditor is not regulated by the FCA.
Some creditors have the power to take further action to collect debts without needing to go to court, so they can still take money from you even after the debt is statute-barred. This mainly applies to DWP or local authority benefit overpayments or HMRC tax credit overpayments, because these creditors can deduct money directly from your wages or benefits without going to court.
The amount you have to pay back may be taken directly from your wages through a direct earnings attachment (DEA).
The creditor can’t do anything to collect a prescribed debt because the law says the debt no longer exists. If you’ve made any payments to a prescribed debt, you can ask the creditor to refund them.
In some cases, a debt can still appear on your credit file even after it’s statute barred. This means it will be visible to other lenders which could make it harder to get future credit.
What should I do if my debt is statute-barred or prescribed?
What to do next depends on how sure you are that the limitation period has definitely passed.
If you’re certain the limitation period has passed
If you haven’t heard from the creditor then you don’t need to do anything.
If the creditor is contacting you, and the debt is definitely statute-barred or prescribed, you should write to them to explain that you won’t be making any further payment. Ask them to stop contacting you about the debt, or, if they believe the debt is still owed, to send you evidence.
We have a statute-barred template letter you can use to ask your creditors to stop contacting you.
If you’re not certain the limitation has passed
Sometimes it’s not clear when the last payment or written acknowledgement to a debt happened. It might be hard to remember exact dates five or six years ago.
You can check payments you’ve made to a debt by getting a copy of your credit file or looking through old bank statements. Alternatively think if there are any memorable life events that tie into the last payment or contact you had with the creditor. For example, did you stop paying a debt after you moved house or separated from a partner?
If you still can’t be sure, you have two options:
- Contact the creditor and tell them you believe the debt is statute-barred or prescribed, asking them to send proof if they believe this is not the case. If the creditor replies with proof of payment or written acknowledgment of the debt, you’ll need to start paying it.
- Don’t contact the creditor and hope that the limitation period ends before they start court action. We don’t recommend you take this approach. If a creditor hasn’t had any contact or payment from you for a long time they may start court action just before the limitation period ends. Ignoring a debt greatly increases the chances you’ll end up with a CCJ, decree or money judgment, which you may have been able to avoid by contacting the creditor sooner.
If the limitation period has passed but you still feel that you want to pay the debt, you can. But if you have other debts to pay which are not statute-barred or prescribed, you should think carefully about whether your money could be better used to pay these instead.
Can a creditor start court action after the limitation period has passed?
If a creditor starts court action after the limitation period has passed, the fact that the debt has become statute-barred or prescribed gives you a defence. If you show the court that the limitation period has passed, the court should cancel the creditor’s case.
If you get court paperwork for a statute-barred or prescribed debt it’s very important that you complete the forms and return them on time. If you don’t, the court won’t know about the limitation period ending and you’ll get a court order.
Depending where you live and the type of debt, this could be a CCJ, liability order, decree or money judgment. You may be able to get this cancelled later, but this can be difficult and there may extra court fees to pay.
Filling in court forms for a statute barred or prescribed debt can be more complicated than normal, and there’s a possibility you may need to attend a hearing if the court needs more information. Please contact us for help if this happens.
Once you’ve returned the forms to the court explaining that the limitation period has passed, the onus is on the creditor to provide evidence that it hasn’t.
If the creditor can provide evidence that the limitation period hasn’t passed you’ll get a court judgment as normal and you’ll have to pay the debt. This evidence could include proof of payments you’ve made or copies of letters you’ve sent.
If the creditor can’t prove that the limitation period hasn’t passed, the court should dismiss their claim. You won’t get a court order for payment.