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 four offices throughout Scotland.
If you’re worried that the council might take action against you for non-payment of council tax, entering into a Scottish trust deed can be a beneficial step. It stops legal action by all creditors included in the arrangement, and provides a ‘safe haven’ from which to regain control of your finances. As council tax arrears […]
A debt payment programme (DPP) remains on your credit file for six years, along with other default markers and court judgments that have been made against you. This can seriously affect your ability to borrow for this period of time, and longer. Even if you can secure borrowing, lenders are only likely to offer unfavourable […]
If you owe a debt of £5,000 or less, your creditor may send you a Simple Procedure Notice of Claim. This is a relatively new procedure that was brought in by the Scottish government and commenced on 28th November 2016 – their intention being to make it easier to resolve debt disputes. So if you’ve […]
A Bankruptcy Restriction Order may be made against you if it’s believed that you acted dishonestly, recklessly or unlawfully before you were made bankrupt, or during your bankruptcy. Your Trustee will inform the Accountant in Bankruptcy (AiB), and if their suspicions are upheld, a BRO of 2-15 years can be made depending on the seriousness […]
Debt payment programmes (DPPs) are an intrinsic part of the Debt Arrangement Scheme, which allows you to pay off unsecured debt at an affordable rate. If a debt payment programme is rejected by one or more creditors, the DAS Administrator can apply their discretion on whether to approve the plan, after using a test to […]
If you’re struggling to pay your unsecured debts, a debt payment programme could help you to regain control of the situation, and become financially stable again. Debt payment programmes are a fundamental part of the Debt Arrangement Scheme (DAS) in Scotland, and allow you to repay over a longer period of time. These programmes involve […]