1. STATUTE BARRED & THE LIMITATIONS ACT 1980
INFORMATION FOR ADVISERS

2. What is the limitations act?
The Limitations Act 1980 lays out the rules on how long a Creditor has to take certain action to recover the debt
Time limits are different according to the type of debt
6 years or 12 years (3 years in some cases)

3. Statute barred
If a debt is statute barred it means that by law the Creditor has run out of time to use certain types of action to try and make the client pay
The debt still exists and it may still be on the credit file
The client can choose to pay if they wish

4. When does the limitation period start from?
Known as the Cause of Action – when the limitation period starts running
Unsecured debts are called Simple Contract debts and the limitation period is 6 years
The period starts when at the point where the Creditor is able to take court action when the client is in arrears on the account – usually after 1 or 2 missed payments
The limitation period restarts every time a payment has been made

5. Simple contract debt
This type of debt will normally be statute barred if:
The Creditor has not obtained a CCJ against the client, and
The client/s have not made a payment towards the debt during the last 6 years, and
The client/s have not written to the creditor admitting they owe the debt during the last 6 years

6. HOW TO RESPOND TO A CLAIM FOR PAYMENT
The client should never acknowledge the debt if they believe it is statute barred
Advise them to write to the Creditor/Collection agent telling them about the Limitations Act
It is now for the Creditor/agent to prove it is still enforceable
Check that court action hasn’t already been taken (as the Limitations Act no longer applies)

7. COUNCIL TAX
The limitation period starts running when the Council first sent a bill
The Council should not ask for a Liability Order more than 6 years after the council tax became due
Once a Liability Order exists there is no time limit for enforcing it, however the Council may decide not to pursue a very old Liability Order

8. MORTGAGE Shortfalls
There are 2 separate limitation periods for mortgage shortfalls:
12 years for Capital owed
6 years for the interest on the shortfall
The period starts running from when the Lender was entitled to be repaid in full – usually after two or three missed payments

9. HMRC Debts
There is NO time limit for recovery of Tax, VAT or any related interest
National insurance however, is subject to a 6 year time limit

10. Benefit overpayments and social loan fund
Benefit overpayments limitation period of 6 years
Time limit starts running when a final decision is made on the overpayment either by the Council, DWP or a tribunal
Social Fund loans limitation period is 6 years
Time limit starts running when the loan became due for repayment
If the client is receiving ongoing benefits the DWP or Council may be able to take money directly from benefits or wages to repay the overpayment

11. County court judgements (ccj)
Once a Creditor has a CCJ, there is no time limit on how long they have to enforce the CCJ
If the CCJ is more than 6 years old and the Creditor wants to use enforcement action, they must first get permission of the Court
If the client thinks the debt is Statute Barred and the creditor then applies for a CCJ, the client can ask for the CCJ to be “set aside” in order to argue that the Limitations Act applies

12. OTHER DEBTS Fuel debt – 6 years from the date of the bill
Telephone charges – 6 years from the date of the bill
Water – 6 years from the date of the bill
Rent arrears – 6 years from the date the rent became due. Each amount of rent has it’s own 6 year limitation period
Possession of Land – 12 years from default on payment

13. JOINT DEBTS
If a client thinks a joint debt should be statute barred, they must check with the other person to see if they have made any payments.
If they have, the limitation period will start again for both debtors
If the other person hasn’t paid anything but has admitted to the creditor in writing that they owe the debt, the time limit will restart BUT only for them

14. How long does it last?
It lasts until all the included debts have been repaid
If the Judge grants a Composition Order the repayments will only need to be made for 3 years
The Admin Order is recorded on the credit file for 6 years from the date the Order was made
Also added to the Register of Judgments, Orders & Fines for 6 years from the date the Order was made