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What happens with debt over six years old in Scotland?

  • Sharon McDougall -
  • 9th February 2021 -
  • 2 minutes to read

Are debts over six years old in Scotland written off?

In Scotland, unsecured debts over five years old are known as prescribed debts under the Prescriptions and Limitations (Scotland) Act, 1973. Being prescribed means debts no longer exist.

They become unenforceable, and creditors have no right to chase them once the ‘limitation period’ has been exceeded. This differs slightly from England and Wales where debts become statute barred, and unenforceable, after six years.

So if you have a debt that’s been outstanding for five years or more and it meets the criteria for being prescribed, you shouldn’t be pursued for payment by the creditor.

At what stage does a debt become prescribed in Scotland?

For a debt to be prescribed, certain conditions need to apply for the whole of the five-year limitation period:

  • You musn’t have acknowledged the debt by letter or email (a letter or email stating that you don’t owe the money is an exception to this rule)
  • You shouldn’t have made a payment towards the debt
  • The creditor can’t have contacted you about the money owed
  • The creditor must not have taken court action regarding the debt during the limitation period

If the debt was taken out in joint names these conditions also apply to the other person, but how do you know when the limitation period starts? The limitation period begins on the earliest of:

  • Acknowledgement of the debt by either party
  • Payment towards the debt
  • The earliest date the creditor could have taken legal action

The earliest date the creditor could take action is typically laid out in the terms and conditions of a loan or credit agreement – it could be after the third default, for example. For debts with no such detailed terms, you need to seek professional guidance on when the limitation period commences.

Do all debts in Scotland become prescribed after five years?

Unsecured debts, such as credit cards and store cards, payday loans, personal loans, and catalogue debts, become prescribed after five years in Scotland if the eligibility conditions are met.

For some other debts the prescription period is longer, and some types of debt don’t become prescribed at all. Here are some examples:

  • The limitation period for mortgage interest payments is five years, but the capital element of your mortgage has a limitation period of 20 years
  • Council tax debt, and some state benefit overpayments, also have a prescription period of 20 years
  • There’s no prescription period at all for tax debts, including capital gains tax, income tax, and VAT, so your liability for these debts is unlimited in terms of timescale

What if a creditor contacts you about a prescribed debt?

If a creditor continues to contact or harass you over a debt outside its limitation period you should seek professional advice on how to proceed. They may be unaware that the debt no longer exists, in which case you’ll need to confirm in writing that it’s now a prescribed debt and request that they no longer contact you.

Should a creditor commence court action over a debt that’s outside the limitation period, it’s important to complete and return the paperwork to the court so they know it’s now prescribed.

Again, it’s advisable to obtain professional assistance in completing these court forms under the circumstances, and ensure all the information and paperwork required by the court is provided.

Scotland Debt Solutions can advise on whether a debt is prescribed, and help you deal with creditors who continue to chase payment on such debts. Please contact one of the team to arrange a free same-day meeting – we operate a network of local offices around Scotland.

Sharon McDougall
Sharon McDougall
Manager
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