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.

How can I build my personal credit score?

6th March 2019

Your personal credit score plays an important part in securing new loans and credit, and can affect your financial life for better or worse. Lenders use the information in your credit file to determine whether you present a high risk of default, and if your credit score is low, you may find it difficult to […]

Read more

Could a Credit Union help with my cash flow problems?

5th March 2019

Credit unions offer a range of financial products including current accounts, savings accounts, and loans, and can be a good alternative to banks and building societies whilst also helping your cash flow. There are credit unions all around the UK, almost 100 of them operating in Scotland. They’re not always widely advertised, however, and although […]

Read more

Help – my monthly outgoings exceed my income

4th March 2019

It’s a worrying situation when you realise your outgoings exceed your income, and it can be difficult to prevent debt in this situation, but there are solid steps you can take to get back on track – you just need to act quickly. Increasing your income or reducing the money going out are essentially what […]

Read more

Benefits and tax credits when you’ve lost your job

1st March 2019

If you’ve lost your job, state benefits and tax credits can provide vital financial support to see you through this tough time and help you avoid taking on too much debt while you look for more work. As far as your old employment is concerned, it’s important that you check your final wage slip to […]

Read more

How has the Mond ruling changed PPI claims after a Trust Deed?

26th February 2019

If you are a Scottish resident in financial difficulty, you may have entered into a Trust Deed in order to restructure debt repayments to creditors. A Trust Deed is a fixed voluntary agreement made between the debtor and creditor, with the help of a trustee. Debt is broken down into smaller, affordable instalments, typically lasting […]

Read more

Which debts can be included in a Debt Arrangement Scheme (DAS)?

21st February 2019

A Debt Arrangement Scheme (DAS) is a government backed scheme which allows you to repay debt through contractual, monthly instalments without the threat of legal action and incurring penalties or interest. The scheme was established in 2004 for Scottish residents in debt, providing an alternative solution to sequestration, the Scottish equivalent of bankruptcy. A Debt […]

Read more