Question About Debts Becoming Statute Barred

Stereo

This question has come to me from a friend...

With debts becoming Statute Barred after 6 years of no contact from the person owing, does it matter if the debts are currently being handled by someone from a Debt Management charity and they have contacted the said creditors? Will the debts still become Statute Barred?

Jinx

My understanding is that payments are counted as contact, so it won't go statute barred as you need 6 years non contact and non payment.

The default will disappear from the credit report but that doesnt mean its statute barred.

Stereo

Jinx wrote: »

My understanding is that payments are counted as contact, so it won't go statute barred as you need 6 years non contact and non payment.

The default will disappear from the credit report but that doesnt mean its statute barred.

Payments have not been made for 5 and a half years.

The Debt Management charity have simply contacted the creditors to inform them that no more payments can be afforded. However, does the fact that they have spoken to the creditors mean that the debts can not become Statute Barred, even though my friend has had no contact for 5 and a half years?

SideShowBob

I am sure someone will correct me but a debt becomes statute barred after 6 years if you have not made a payment or acknowledged the debt.

Making a payment or writing to them admitting the debt is yours will re-start the clock.

I am not sure how it works if a 3rd party is dealing with them on your behalf but would assume it would be seen as acknowledgement.

fatbelly

Stereo wrote: »

Payments have not been made for 5 and a half years.

The Debt Management charity have simply contacted the creditors to inform them that no more payments can be afforded. However, does the fact that they have spoken to the creditors mean that the debts can not become Statute Barred, even though my friend has had no contact for 5 and a half years?

Unless they carefully worded the letter so that it does not constitute an acknowledgement, yes.

So you would need to see a copy of the actual letter.

DVardysShadow

Stereo wrote: »

Payments have not been made for 5 and a half years.

The Debt Management charity have simply contacted the creditors to inform them that no more payments can be afforded. However, does the fact that they have spoken to the creditors mean that the debts can not become Statute Barred, even though my friend has had no contact for 5 and a half years?

The answer to this is legal/technical.

If the Debt Management Charity were acting as agent of the debtor, then contact from them would work exactly the same as contact from the debtor, in which case it depends whether the letter was careful worded to avoid acknowledgement of debt.

If they were not acting as agent, then it does not matter what they said.

In order to establish whether they were acting as agent, you need to ask if they were authorised to contact creditors and to what extent they were authorised. If they were authorised, then they were agents, but if the communication is outwith their instructions or remit, then they would not be acting as agent.

Complicated and no clear cut answer. A lot more detail needed to answer this.

Stereo

Thanks DVardysShadow.

I'll report back tomorrow with info on that. Just out of interest, how do the CRA's differentiate between the charity acting as agent or not?

fermi

Nothing to do with the CRAs.

Do you mean the creditors or courts?

Stereo

fermi wrote: »

Nothing to do with the CRAs.

Do you mean the creditors or courts?

Well, whoever it is that enforces or decides if the debt becomes Statute Barred?

Apparently the Debt Management charity has been in touch with one of them but my friend is making an appointment to see them on Friday, I'm going to take a look at the letters that have been sent from them to the creditors to see if the debts have actually been acknowledged.

fermi

The court would make that call if legal action was ever taken.

Short of that, all you are ever going to get is an opinion on what they think a court would decide. An experienced debt councillor should be able to make a reasonable assesment if they are clued up in this area.