I have 6 debts, mental health issues and am confused and worried

SocksMalone_2

Back in 2008 I had a breakdown, and amongst other things, my finances spiralled out of control. Recently with the help of a psychotherapist, and Martin's guide about debt and mental health I decided it was time to take my head out of the sand and contact the debt companies. Four debts are being handled by Company 1, one by Company 2, and the last by Company 3.

With help, I wrote to all three, explaining my situation, send a budget sheet that shows I have no spare money, and a letter from my psychiatrist explaining how my disorder not only contributed to my debt, but how it's also a stumbling block in my recovery due to anxiety / paranoia etc.

I was surprised when company 1 wrote back (a really nice, understanding letter btw) to say that actually my 4 debts with them were "subject to section 5 of the limitation act 1980" and as such had all been closed some time ago and they have cleared the outstanding balance!

I am incredibly grateful to them for this, but am now confused as company 2 wrote back, didn't acknowledge the letter from my psychiatrist, and just said they felt I had enough money to pay them back. (I have no savings, dont own a property and my budget sheet showed I had less than £15 spare a month, when in reality I end up borrowing most months to pay rent). The third company wrote today and said they were sorry, but the best they could do is put my account on hold for 12months and review then.

How can 4 of my debts be subject to this 'Limitation Act' and not the other 2?i have found paperwork for all, and they all fell into arrears in 2008 when I became ill.

Should I write back to companies 2 and 3? What should I say?

sourcrates

Hi,

It's not a case of them doing you a favour, the limitations act is government legislation lenders must comply with.

Although for them to come straight out and say so, without a fight, is unusual.

For a debt to be statute barred, there has to be a period of 6 years (England and wales) where no payment or written acknowledgment has been made, if that applies to your other accounts, then you should send the statute barred letter to them, nothing else.

Info and template letter here :

https://www.nationaldebtline.org/EW/factsheets/Pages/time-limits-for-recovering-debts/statute-barred-debt.aspx

Once statute barred, always statute barred, it cannot be undone.

Don't expect every lender to be as compliant though.

SocksMalone_2

Thank you Sourcrates, I didn't expect a reply so quickly. I'll have a look at the template letter you have linked and write to them.

SocksMalone_2

Just occurred to me, will they count the letter from me and my psychiatrist as an acknowledgement of the debt?

sourcrates

SocksMalone wrote: »

Just occurred to me, will they count the letter from me and my psychiatrist as an acknowledgement of the debt?

Won't matter if before you sent the letter, 6 years had already passed without payment or written acknowledgment.

Sounds like it's been more like 8 years so there should be no problems on that score.

Any period of 6 years counts towards the limitations clock.

fatbelly

SocksMalone wrote: »

Back in 2008 I had a breakdown,...

With help, I wrote to all three, explaining my situation, send a budget sheet that shows I have no spare money, and a letter from my psychiatrist explaining how my disorder not only contributed to my debt, but how it's also a stumbling block in my recovery due to anxiety / paranoia etc.

This is why you should always get advice from a debt adviser.

The statute barred angle overrides everything else and would have saved you (and your psychiatrist) a lot of hassle.

I agree with Sourcrates - just send the letter.

National_Debtline

SocksMalone wrote: »

How can 4 of my debts be subject to this 'Limitation Act' and not the other 2?i have found paperwork for all, and they all fell into arrears in 2008 when I became ill.

Should I write back to companies 2 and 3? What should I say?

Just to add to the advice from the others, it may well be that all of your debts are statute barred but at this point but company 2 and 3 still have a right to ask for payments. Being statute barred just means the debt is unenforceable in court, rather than disappearing.

However, once you inform the creditors that the debt is statute barred they either need to prove it isn’t or leave you alone.

James
@natdebtline

fatbelly

James is right - that is where the FCA guidance quoted in the standard letter comes in.