Last Updated: Tuesday 26th March, 2013
This guide is designed to help you deal with debt collection companies who want to try and mislead
you into thinking that your old debt can be legally recovered. Below you'll find all the information you need, including a template letter, to successfully deal with these chancers!
Consumer credit contracts like everything else in this world have a "use by date". In respect of credit contracts, this means that after a particular timescale the debt or contract can longer be enforced - its Statute Barred
What is statute barred debt?
Statute barred debt is debt which in certain circumstances becomes unenforceable in court. The piece of legislation which sets out these circumstances is the Limitations Act 1980. So when a creditor comes chasing you for an old debt you can use the following information to access whether or not your debt is time barred.
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How long can a creditor chase a debt?
This is dependent on the type of debt you have. The most common form of debt which people ask about in our forum is unsecured debts eg credit cards, personal loans, store cards, catalogues, bank loans, finance company loans etc. The Limitations Act 1980 states that when the following conditions are met then the debt cannot be pursue through the courts. The conditions are:-
- That the creditor has not taken court action against you, eg CCJ, AND
- You have not made any payments on the debt over the last 6 years,AND
- During the years, you haven't written to the creditor acknowledging that owe them money.
As you can see all three conditions must be met in order for the debt to be "time barred". So the answer to the above question is 6 years.
Dealing with Creditors and debt collectors
If you are being pestered or chased by creditors about an old debt which you believe has been statute barred there are certain things you can do to stop them pursuing you.
- Established whether or not there are any judgements made against you. This will involve contacting the three main credit reference agencies and checking your credit report.
- Under the Data Protection Act 1988 you can also request a copy of any files the company has. You must remember when writing to the creditors that you are in no way acknowledging the debt. Use this template letter
- Use this template letter to write to the creditor to say that under the Limitations Act 1980 the debt is now statute barred and you would like them to stop pestering.
Keep copies of all letters and send them by recorded delivery.
Never sign any of your letters. Why? Well I am not one to cast aspersions, but some people think that some unscrupulous finance and debt collection companies have used the signature attached to letters to forged letters from debtors acknowledging the debt. I don't have any proof of this. You can make up your own mind whether or not you sign the letter.
When writing to any debt collection company, make sure you head the letter up, "I do not acknowledge any debt to you or any other company or organisation that you claim to be representing."