6 year limit debt chasing rule

elsanto

Hello,

I have a question about the time limit for chasing private debts, by creditors. I read that it is 6 years for unsecured money. Is this right?

My chronology:

2012 to 2014 - I was borrowing money, on credit cards, for a house refurbishment project. Unsecured, of course.

2015 beginning - The project was finished and I stopped borrowing (the credit limit had been reached anyhow). I was going to sell the house to pay the credit card debts.

2015 middle - My divorce came and the sale of the house was prevented. I was paying large interest on the credit card borrowing.

2015 middle - As a result of the ancillary relief proceedings, the court sold the house and left me with all the debts (none for my ex). I then entered into an arrangement with the credit card companies paying £20 p/m each for the debts.

2015 end- I soon ran out of money and I was advised the stop paying even the £20 or I would end up in the street.

2016-2018 I spent two years abroad. I lost contact with the credit card companies and other smaller creditors. 1 or 2 of the smaller ones took me to court and got court orders, in my absence, but I did not know.

2018-2022 I returned to the UK and set about working like a donkey, self-employed. I made new money and I invested it in a Ltd company which I set up early in 2021. I am now in the company payroll with a minimum salary (no self-employment).

I have still had some creditors chasing me. I recently got a letter,  from a money collector, telling me that I still owe £10,000.00 on a credit card.

Now I need money to send my two children to University and pay for their living expenses. I plan to live with one of them while she is in Uni (I need to rent a place in expensive London). I also need money for my retirement as I have no private pension.

I do not own a house or anything else of value (car worth £300) other than my work equipment.

My elder daughter is now 18 and she could be entitled to things like being a partner in my company. I could also put half or more of the money in trusts for my children (it is not a lot).

Does the 6 year rule apply to Council tax (on that house project) dating back to 2015? They are still chasing me for Council tax I stopped paying when I ran out of money.

My credit rating is now zero. I do not see that is worth paying a lot of money to clean it up as I am sure it will remain bad for years to come (until I am 6 feet under) so my policy is that it is better to have the money to be able to pay for everything in cash.

Thanks for any feed-back.

sourcrates

Its called the "Limitation act" it became law, or was revised, in 1980.

Basically, any simple contract debt will become statute barred after the expiration of 6 years, as long as no payment or written acknowledgement by the debtor has been made, and no legal action has been taken to recover the debt.

In legal terms it is referred to as "an action founded on tort, shall not be brought after the expiration of six years".

For loans/cards, the cause of action date will be the date of default, or date of last payment, whichever would apply.

You mention court action was taken, if that`s the case, the limitation act would no longer apply, but any CCJ granted has to be enforced within 6 years, or else court permission has to be sought.

Credit files are expunged every six years so nothing will haunt you forever.

Council tax is collected under a liability order, and there is no statute of limitation on that.

fatbelly

There is equivalent legislation for council tax but in practice they always get a liability order within a few months so it doesn't really help. My council still pushes for committal (imprisonment) for a few dozen cases per year. 

So the other debts without a ccj go statute barred six years after you last acknowledged the debt by payment or in writing.

The debts with a ccj have six years from the date of judgement to be enforced, or must then apply for permission from the court to enforce.

elsanto

fatbelly said:

There is equivalent legislation for council tax but in practice they always get a liability order within a few months so it doesn't really help. My council still pushes for committal (imprisonment) for a few dozen cases per year. 

So the other debts without a ccj go statute barred six years after you last acknowledged the debt by payment or in writing.

The debts with a ccj have six years from the date of judgement to be enforced, or must then apply for permission from the court to enforce.

Thank you.
So, yes, last time I paid the default payments to the credit card companies was in 2015 (maybe I still paid a bit in early 2016) so that is 6 years. I defaulted early in 2015. I guess that is why the credit card debt collectors still write after the 6 year period. To see if anybody will fall for it and say: "yes I owe you the money but can't or won't pay" and then they have him acknowledging the debt.
As for the council tax, I offered to pay £10 per month, earlier in the year and they have not come back, so they cannot ask for a court order for imprisonment.

elsanto

sourcrates said:

Its called the "Limitation act" it became law, or was revised, in 1980.

Basically, any simple contract debt will become statute barred after the expiration of 6 years, as long as no payment or written acknowledgement by the debtor has been made, and no legal action has been taken to recover the debt.

In legal terms it is referred to as "an action founded on tort, shall not be brought after the expiration of six years".

For loans/cards, the cause of action date will be the date of default, or date of last payment, whichever would apply.

You mention court action was taken, if that`s the case, the limitation act would no longer apply, but any CCJ granted has to be enforced within 6 years, or else court permission has to be sought.

Credit files are expunged every six years so nothing will haunt you forever.

Council tax is collected under a liability order, and there is no statute of limitation on that.

Thank you for this. For me to have it clear, what happens if I defaulted in mid 2015, then they withdrew the credit cards but I made some payments as part of an arrangement to pay the debt, within the 6 year period, then I stopped them altogether. I may have made some payments in that year 6 year period. 
That could be the reason one credit card company money collector sent me a letter recently. Maybe the realised the date is about to expire. How long would they have to take action and what can they do?
Thanks

RAS

Have you checked your credit records? That'll give you a clue as to the default dates. 

Did you pay anyone anything after you left the UK in 2016? You'll know that date. 

You should be be able to get the date of CCJs and other judgements from trustonline.org.uk. So you know which are enforceable. Bear in mind that CCJs may well affect your ability to rent.

Given the uncertainty at the moment, I'd be inclined to do nothing re the creditors unless you get court paperwork through; do set up mail redirection if you move. Then you'll need to send the "prove it letter" and they'll have to produce their evidence that it's still enforceable. 

fatbelly

FYI

Once a debt is statute barred it stays that way. However under English law the debt still exists, so they can ask you to pay, and you can say 'no'

You are correct that they can only consider imprisonment for council tax if there is 'wilful refusal' (this means that you have the money but are refusing to pay) or 'culpable neglect' (this means that you had the money to pay but neglected to do so)

elsanto

RAS said:

Have you checked your credit records? That'll give you a clue as to the default dates. 

Did you pay anyone anything after you left the UK in 2016? You'll know that date. 

You should be be able to get the date of CCJs and other judgements from trustonline.org.uk. So you know which are enforceable. Bear in mind that CCJs may well affect your ability to rent.

Given the uncertainty at the moment, I'd be inclined to do nothing re the creditors unless you get court paperwork through; do set up mail redirection if you move. Then you'll need to send the "prove it letter" and they'll have to produce their evidence that it's still enforceable. 

Thanks.

Yes, I found some old statements. Somebody advised me to stop making payments, under the arrangement but stupidly, being a nice guy, I made payments until October 2016. However, I still do not have clear if the starting date for the 6 year period is the date of default/default notice or last payment under an arrangement?

Yes, I am keeping quiet at present. If I contact them, it may trigger action.

I already had CCJ's when I returned to the UK and rented a house. My solution was to offer 6 months' rent in advance and they said yes. Now I have a record of paying rent for 4 years and keeping the house in good order. That is why I say that it is better for me to keep the money to be able to pay for everything without any credit.

sourcrates

Each payment you will have made, will have re-started the time barred clock, unless that debt was already time barred.

Payments are counted as acknowledgements, the clock starts at the point in time referred to as the "cause of action date".

Now this will usually be the date of default, or the date of last payment, or written acknowledgement by you, if you make another payment, or write and acknowledge the debt, then the clock gets re-started from that point.

That is unless legal action has been taken, then the act no longer applies, but there is different legislation which allows 6 years for enforcement of CCJ`s, after which a court must approve any further measures.

It is quite complex, so best to drag things out as long as possible and if a particular issue comes up, post back for advice.

elsanto

sourcrates said:

Each payment you will have made, will have re-started the time barred clock, unless that debt was already time barred.

Payments are counted as acknowledgements, the clock starts at the point in time referred to as the "cause of action date".

Now this will usually be the date of default, or the date of last payment, or written acknowledgement by you, if you make another payment, or write and acknowledge the debt, then the clock gets re-started from that point.

That is unless legal action has been taken, then the act no longer applies, but there is different legislation which allows 6 years for enforcement of CCJ`s, after which a court must approve any further measures.

It is quite complex, so best to drag things out as long as possible and if a particular issue comes up, post back for advice.

Thank you!