Loan statute Barred

stevectaylor

Here is one for you. If you had a joint loan which after 6 years was statute barred. If one of the party acknowledges this debt, would both parties be liable to be pursued again by the creditor?

antrobus

Once a loan becomes statute barred, it remains statute barred, irrespective of any subsequent acknowledgements.

stevectaylor

antrobus wrote: »

Once a loan becomes statute barred, it remains statute barred, irrespective of any subsequent acknowledgements.

I was under the impression that once you aknowlege you own the debt even after, the clock starts again?

SeanG79

I would expect the short answer to be yes...

Under the Limitation Act 1980, which applies to England and Wales, a debt is considered to be statute
barred when no payments have been made against it or where it has not been acknowledged* for six years.
In Northern Ireland, statue barred debts are governed by the Limitation (Northern Ireland) Order 1989. In
Scotland, statute barred debts are governed by the Prescription and Limitation (Scotland) Act 1973 which
states that the debt itself ceases to exist after five years providing that it has not been acknowledged and
that no relevant claim against it has been made by the creditor.
*For clarification purposes, acknowledgement is either acknowledgement made in writing or a payment
received against the debt. Once acknowledgement is received, this re-sets the limitation period.
Whilst the OFT accepts that the debt still exists, the OFT considers that it can be unfair to pursue the debt in
the circumstances set out in their Debt Collection Guidance (section 2.13 and 2.14a and b), and it is the
methods in which the debt is attempted to be collected that can cause concern to the OFT.
In essence, providing you work within legislation and guidance, collection of statute barred accounts is a
legitimate activity. However, if your debtor has stated that they will not be paying a debt because it is statute
barred, these accounts should be closed and your records updated appropriately.

but if it was statute barred why would the other party (after so many years) want to resurrect the debt?

antrobus

SeanG79 wrote: »

Once acknowledgement is received, this re-sets the limitation period.

The six years (in England and Wales) starts from the last date on which the acknowledgement was received, so each acknowledgement does indeed re-set the clock. But once the six years has passed, the debt becomes stature barred, and remains statute barred thereafter.

That's my understanding at least. (I'm sure it's a point that's been covered here on MSE many times before.)

SeanG79

Antrobus, you are correct...

Once a debt has become statute barred there aren't any actions the creditor can take to unbar it. Once six years without contact or acknowledgement have passed legal action to enforce the debt is still barred even if you (the debtor) were to make a payment or acknowledge the debt.^^

The creditor can still contact you, even if a debt is statute barred - they just can't use any legal proceedings to force you to pay.

fermi

As said, once statute barred, it remain that way. Permanently.

The 'Act' specifically states that:

"... a right of action, once barred by this Act, shall not be revived by any subsequent acknowledgment or payment."

fermi

Also this is important if for arguments sake it turned out this loan was not quite statute barred:

----> 31. Effect of acknowledgment or part payment on persons other than the maker or recipient.

"(6) An acknowledgment of any debt or other liquidated pecuniary claim shall bind the acknowledgor and his successors but not any other person."

In other words, on a joint loan, if you acknowledge you only restart the clock for yourself. Not the other signatories.

Part payments are different. They restart the clock for all signatories, no matter who made the payment.