Statute Barred Debt in Scotland

June 22, 2015

A statute barred debt is one that can no longer be collected by a creditor due to the elapsed time limit laid down in The Prescriptions and Limitation (Scotland) Act, 1973.

The rules for statute barred debt in Scotland differ from those in England and Wales. The timescale in Scotland is generally five years, with England and Wales imposing a time limit of six years via The Limitations Act, 1980.

For a debt to be statute barred after the five-year timescale in Scotland, the following must also apply during this time period:

• The debt has not been acknowledged by the debtor
• There are no decrees on the debt
• The creditor has not made contact about the amount owed
• No repayments have been made

If the debt is in joint names, the criteria for statute barring also applies to the other party and they must meet the criteria described above.

Statute barring timescales for other debt

The five-year timescale applies to unsecured debt such as credit cards and personal loans, but what about other types of debt?

Here is a short breakdown for statute barring:

• Mortgage arrears (capital): 20 years
• Mortgage arrears (interest): five years
• Council Tax and overpayments of Social Security Benefit: 20 years
• Income tax and VAT: no time limits

Your creditor cannot chase you for payment of the debt, once it is statute barred

This is an important part of the legislation, as once a debt has been statute barred you are protected from harassment or any other contact from the creditor. You cannot be pursued through the courts, as the debt is deemed to have either been abandoned or repaid.

An issue can arise, however, if your creditor hires a debt collection agency in an attempt to collect their debt, or continues to pursue you for the money themselves. Seeking the guidance of a professional advisor should be your first step, to make sure that the correct letter format is used.

You can write to the creditor, but it is important to make sure the wording is correct, and let it be known that this is a statute barred debt that no longer exists. The creditor or debt collector can be challenged if they try to collect their debt when they should know that it is statute barred, as described in the Financial Conduct Authorities guidelines:

• “It is misleading for a firm to suggest or state that a customer may be the subject of court action for the sum of the statute barred debt when the firm knows, or reasonably ought to know, that the relevant limitation period has expired.” 7.15.7 Guidance¹
• “A firm must not continue to demand payment from a customer after the customer has stated that he will not be paying the debt because it is statute barred.” 7.15.8 Rule¹

You should also keep copies of all documentation in relation to the debt.

Scotland Debt Solutions can advise if you are being pursued for repayment by a creditor. We deal with all types of debt, and offer an initial meeting free-of-charge. Call our expert team to make an appointment at any one of our five offices throughout Scotland.

My partner and I are considering a joint loan, is it wise?

21st May 2019

When taking out a joint loan, there are many things you need to consider. Signing up to a joint credit agreement is a huge commitment and it’s important to ensure you have all the facts before signing on the dotted line. While no one wants to think about a relationship breaking down, the truth is […]

Read more

Where should you start when looking to save money each month?

21st May 2019

If you’re looking to save some money it’s a good idea to make a detailed budget that lets you see where your cash is currently being spent, and offers an overall view of your finances. You’ll need to collect together your income and expenditure details, including annual costs such as insurance, car expenses, birthdays and […]

Read more

Will I Lose My Home If I Enter Into a Trust Deed?

21st May 2019

A trust deed is a common debt repayment programme based around a voluntary arrangement made between you, your creditors and a qualified independent trustee who takes control of your debt repayments for a typical period of four years. If you’re having difficulty paying your debts and have assets or a regular income, you may qualify […]

Read more

How to write off gambling debt

20th May 2019

If you have built up debt from gambling, you may be able to write off part or all of the debt via a formal Scottish insolvency route. Not all insolvency solutions allow debts to be written off, but you may be eligible for a trust deed if you meet certain criteria, with sequestration also being a possibility […]

Read more

Dealing with HMRC tax debts

20th May 2019

Her Majesty’s Revenues and Customs (HMRC) is one of the biggest creditors in Scotland, and indeed across the rest of the UK. Millions of people make payments to the government through HMRC in the form of income taxes, National Insurance and VAT every year. For the majority of people in employment, this is done automatically […]

Read more

Coping with council tax debts

20th May 2019

Council tax is a charge levied on residential property and payable to the local council. While some properties are exempt from paying council tax, most households must factor this bill into their monthly budget. Households will be given a yearly charge which can then be broken down into a series of monthly instalments throughout the […]

Read more