DRO and Statute Barred Debts?

alexr2014

Hello

Please can anyone advise on the above? Are debts that would be classed statute barred included in DRO?

Basically, I got into debt back in 2007- the recession hit, i lost my job and couldn't keep up with payments on several non-secured loans. They have sent letters and debt collectors since then, but have not applied for CCJ as I have no assets. I haven't acknowledged the debts or made payments since end of 2007. Most have stopped sending letters or anything now.

I managed to get back on my feet a little after finding work again, but then we went back into recession and I again lost my job and struggled. This time, I struggled to pay council tax. I've tried my best to pay it all back but its just too much and I'm struggling to feed my family, heat our house etc. My partner doesn't work as we have a near 3yr old, but is trying to find some part-time work as we will get 15hours free childcare after jan, so its all on me. I'm self employed and my earnings fluctuate sometimes-without the debts I would be able to manage the bills, but trying to make repayments plus keep up to date with new bills is too much. I've cut down on as much as possible- don't have luxuries like sky tv or anything, but theres only so many ways to try to save money.

So, would these old debts have to be included in a DRO as they are technically unsatisfied? I'm at my wits end-I can't sleep because of the worry. I feel like a prisioner in my own home as keep all the doors and windows locked, panic if someone knocks the door. I feel terribly depressed, but can't go to my doctor as can't have that put on my medical records for future work purposes. I can't afford bankruptcy and if the old debts were barred I would owe about 4K in council tax, utility debts etc so I think I would qualify.

Thanks, in advance.

DorisTrousers

There is not a straightforward answer to this one.

On one hand, statute barred debts by their very nature are not legally enforceable, and can therefore not be listed as qualifying debts. On the other hand, the Insolvency Service also says that due to the uncertainty of limitation, the first principle must be that all unpaid debts are listed in the DRO application.

The end result is that where an intermediary is satisfied that a debt is statute barred, and where evidence is available to that end, then the debtor can choose not to list it.

My own opinion is that as long as the total is still less than the £15k threshold all debts should be listed, even the statute barred ones, as you have nothing to lose by doing so.

National_Debtline

Good answer by DorisTrousers above.

OP - I would agree that if the total you owe - newer and older debts alike - is below £15K, then you may as well list everything and leave nothing to chance.

Do you happen to know the total figure?

Dennis
@natdebtline

alexr2014

Hi
Thanks for your replies. The 'old' debts total about £16k. I can't afford bankruptcy fees which is why I hoped a DRO might be a way forward, given that they have really given up apart from the odd letter occasionally from whatever company they've sold the debt to. I just dont know what to do?
I dont have any assets, I have a 14yr old car that broken down 2 weeks ago, so i'll probably have to scrap as cant affordthe repairs (plus they cost more than the cars worth).
I've spoken to the council- they threatened me with prison for non-payment- I explained its not that I won't pay, but can't pay. They want so much back each month and won't accept less. I'm lost.
Even if I stopped paying the debt repayments it would take months to get the bankruptcy fees together by which time they would probably have me thrown in the slammer.:(

longtermplanner

I suggest you should get a copy of your Experian report and see if any of these old debts show up and if they do, what they say. If you apply for a DRO, the intermediary (person who is setting the DRO up for you) will check this report to see that no debts have been missed off your application.

I'm not saying that you shouldnt tell the intermediary about any older debts which don't show up, just that you need to know if anything is still showing. Getting the report will clarify things for you.

Even if I stopped paying the debt repayments it would take months to get the bankruptcy fees together by which time they would probably have me thrown in the slammer

No they won't. Go to your local CAB and get their help to call the debt back from the bailiffs and get the council to accept a reasonable monthly offer. CAB will also be able to help with a DRO.

fatbelly

Here's the text from the Intermediary Guidance on statute barred debts

Statute Barred Debts and Other Unenforceable Debts

This issue of statue barred debts is not at all straight forward and limitation on debt is a complex area of law, however advice has been obtained regarding whether statute barred debts need to be scheduled in a DRO application.

Section 251B of the Insolvency Act 1986 states the following:

251B Making of application
!(2) The application must include—
(a) a list of the debts to which the debtor is subject at the date of the application, specifying the amount of each debt (including any interest, penalty or other sum that has become payable in relation to that debt on or before that date) and the creditor to whom it is owed;

However, Section 251A (2) (a) of the IA 1986 states that a qualifying debt means a debt that is for a liquidated sum payable immediately or at some certain future time.

If a debt is indeed statute barred then it is neither “payable immediately or at some certain future time”.

Firstly to clarify, limitation periods on debts do differ: all contract claims are barred after six years but claims under deed (i.e. mortgage shortfall debts) are barred after 12 years. To add to the difficulty if a debt is acknowledged then time starts to run again.

Limitation, effectively, does not apply against a debt upon which judgment has been obtained. If the creditor has previously taken a debtor to court and obtained a judgment, the debtor will be unable to use the Limitations Act 1980 to dispute the debt. If the judgment is over 6 years old the creditor may need the permission of the Court to enforce the debt.

It is also correct that a ‘debt’ exists beyond the limitation period but the creditor can lose any right to enforce the debt by virtue of limitation.

Due to the uncertainty of limitation, the first principle must be that all unpaid debts should be listed in the application for a DRO; this is so even if the debtor considers that they may be able to rely upon a defence of limitation against enforcement of that debt. Where, prior to the DRO application being submitted, the Intermediary has established that limitation applies and the debtor has evidence that the debt is statute-barred, then the debtor can choose not to list it The Intermediary should be satisfied that the debt is statute barred and keep any evidence on the debtor’s file.

Debts that can be shown to be unenforceable for another reason, for example, a pre-April 2007 Consumer Credit Act regulated agreement that does not comply with the requirements on prescribed terms, can be treated in the same way. Where the court would have discretion whether or not to enforce a debt, it should not be regarded as unenforceable, e.g. a post-April 2007 CCA regulated agreement that does not comply with the requirements on prescribed terms.

If a debtor knows that they have a statute barred debt but has no information about it and it does not appear on any credit reference reports, an application can proceed without including the debt.

In any scenario where statute barred debts are not scheduled in a DRO application a note should be included in the application explaining that there are statute barred debts detailing the sum if known or explaining the quantum is unknown, or an email sent to the DRO Unit explaining this before the application is submitted.

In summary, debts barred by limitation or otherwise unenforceable do not need to be included as qualifying debts for the purposes of a DRO and if they are not listed will not count towards the £15,000 debt limit.

Where the official receiver subsequently discovers that a debt was not statute-barred/unenforceable and as a consequence, at the date of the DRO application the debts exceeded £15,000 the DRO will be revoked.

As limitation and enforceability can be such an uncertain area the general rule should be: if in doubt, list it.