Statute-barred debts

ripofflondon
ripofflondon Posts: 89
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edited 29 January at 11:36AM in Debt-free wannabe
Hi all

My first post in MSE for some time.  I hope this is in the right part of the forum - if anyone thinks it is not then pls feel free to advise where it SHOULD go.

My question:  is time barred debt legally enforceable if the creditor has been requesting payment from before the 6 years expired?  What happened is that in 2009 I bought a buy-to-let flat in a block and in 2010 the original owners sold the freehold to a faceless bunch of money-grubbing sharks (Moreland Estates in case anyone's heard of them).  Moreland supposedly have an in-house property management division and, as freeholders, they exercised their right to fire the original property managers in favour of their own in-house team (Moreland Estate Management). 

As you can probably guess, the service charge promptly ballooned and the quality of service did the opposite.  Repeatedly we the leaseholders asked Moreland Estate Management to show how these service charges were calculated and why they had suddenly shot up, when conversely there was no cleaning of the common parts or any other services that a management co would normally do, to be met only with a deafening silence from Moreland (accompanied by regular demands for ££)

So, in 2014 the leaseholders clubbed together and exercised their Right To Manage.  This involved getting rid of Moreland Estate Management in favour of a management co of our choosing and everything has been good since. 

Good, that is, except for the fact that Moreland Estate Management has continually, between 2014 and now, been chasing the leaseholders for management fees supposedly owed for the period between when we gave notice to Moreland Estate Management that we were changing to another management co, and the date this took effect a few months later.  Every month, they send each of us an 'Application For Payment' with these management fees PLUS various 'late fees' / 'admin charges' and so on.  Once they tried suing one of us for unpaid management fees and, tellingly, the action got struck out when the County Court asked Moreland to show how these supposedly unpaid management fees were calculated and Moreland did not do so.  

Irritatingly some of the leaseholders have tried selling their flats over the years and, when the conveyancers acting for the incoming buyers have discovered these supposedly outstanding management fees, they have insisted that these fees be settled before the sale could proceed.  Result?  The outgoing leaseholders have had no choice but to pay Moreland what Moreland say they are owed.  

On the face of it this should not be happening because these supposedly outstanding management fees date from 2014 ie a period well over 6 years.  However it has been suggested that, because Moreland has been chasing the fees since before the 6 years expired, the 6 years limit does not apply and the alleged debt remains legally enforceable. 

Hence my question:  is time barred debt legally enforceable if the creditor has been requesting payment from before the 6 years expired?

Looking forward to hearing any thoughts anyone may have on this.

Cheers

Comments

  • Brie
    Brie Posts: 9,298
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    Best to read through this on Debt Camel

    Statute barred debt - common questions · Debt Camel

    But these seem to be the crucial bits...

    Think of a timer that runs for 6 years – which can be reset

    A good way to think of statute barring is that there is a 6 year timer. This is set running when the creditor has a cause of action. The sand takes 6 years to drain slowly through… at the end, your debt is statute barred.

    But if you make a payment to the debt or acknowledge it in writing during the six years, the clock is reset back to start at 6 years again.

    --

    How can I tell if my debt is statute-barred?

    Unsecured debts, including most loans, credit cards, catalogues and overdrafts will normally be statute-barred in England and Wales if you can say YES to all the following four points:

    1. it had been more than six years since you last made a payment; and
    2. the creditor has a cause of action more than six years ago; and 
    3. you haven’t acknowledged the debt in writing during this time; and
    4. the creditor hasn’t already gone to court for a CCJ.

    --

    Acknowledging the debt has to be in writing. If you haven’t done this, it doesn’t matter if the creditor has written to you, or you have discussed the debt on the phone – this won’t stop the debt being statute barred. 

    "Never retract, never explain, never apologise; get things done and let them howl.”
  • sourcrates
    sourcrates Posts: 28,537
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    Assuming you are in England or Wales, a "service charge" is nothing more than a simple contract debt, and will fall under section 5, limitation act, 1980.

    In this case, the "cause of action" date would have been when these charges became due, they then had 6 years in which to chase these debts, after which time, if no payment or written acknowledgement has been made by the debtors, the debt becomes what is termed "statute barred".

    However, in a quirk of fate permissible only in English law, the debt still exists, its just that time has run out for the creditor to use legal action to collect it.

    So they can still ask for payment, they just can`t force you to pay.

    That is unless you live in Scotland, or are governed by Scottish law, the law is more debtor friendly, and the same debt there would become "prescribed" after 5 years, and is then extinguished, and cannot ever be chased under threat of prosecution.
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  • ripofflondon
    ripofflondon Posts: 89
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    Many thanks for this - V helpful.  

    Brie said:

    But if you make a payment to the debt or acknowledge it in writing during the six years, the clock is reset back to start at 6 years again.

    This comment by Brie has now prompted another thought in my mind:  although I haven't ever said to Moreland 'i accept I owe you this money' , i HAVE OTOH acknowledged it implicitly in that I asked them to show how it was calculated (and did not say 'I don't owe you this money').  That said, I need to look up when I asked for this information as I believe I asked for it well over 6 years ago.  

    Based on what you have said, Brie, that suggests to me that if a debt is (let's say) 8 years old but the debtor acknowledged it 5 years and 9 months ago (and hasn't said anything to the creditor, nor had any response from them, since), the creditor has another 3 months to pursue it.  Is that correct?

    Mark

  • RAS
    RAS Posts: 32,461
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    Many thanks for this - V helpful.  

    Brie said:

    But if you make a payment to the debt or acknowledge it in writing during the six years, the clock is reset back to start at 6 years again.

    This comment by Brie has now prompted another thought in my mind:  although I haven't ever said to Moreland 'i accept I owe you this money' , i HAVE OTOH acknowledged it implicitly in that I asked them to show how it was calculated (and did not say 'I don't owe you this money').  That said, I need to look up when I asked for this information as I believe I asked for it well over 6 years ago.  

    Based on what you have said, Brie, that suggests to me that if a debt is (let's say) 8 years old but the debtor acknowledged it 5 years and 9 months ago (and hasn't said anything to the creditor, nor had any response from them, since), the creditor has another 3 months to pursue it.  Is that correct?

    Mark

    If the debt was last acknowledged 5years and 9 months ago, the creditor has another 3 months to take enforcement action (England and Wales).

    A lot depends exactly how you made the request for calculation? A Letter might be a problem, on the phone wouldn't be. And exactly how the request was worded. The Prove it letter here is worded so it avoids any acknowledgement of liability, for example.
    The person who has not made a mistake, has made nothing
  • fatbelly
    fatbelly Posts: 20,233
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    Many thanks for this - V helpful.  

    Brie said:

    But if you make a payment to the debt or acknowledge it in writing during the six years, the clock is reset back to start at 6 years again.

    This comment by Brie has now prompted another thought in my mind:  although I haven't ever said to Moreland 'i accept I owe you this money' , i HAVE OTOH acknowledged it implicitly in that I asked them to show how it was calculated (and did not say 'I don't owe you this money').  That said, I need to look up when I asked for this information as I believe I asked for it well over 6 years ago.  

    Based on what you have said, Brie, that suggests to me that if a debt is (let's say) 8 years old but the debtor acknowledged it 5 years and 9 months ago (and hasn't said anything to the creditor, nor had any response from them, since), the creditor has another 3 months to pursue it.  Is that correct?

    Mark

    They would have another three months to start a court claim
  • ripofflondon
    ripofflondon Posts: 89
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    All - many thanks for this - been a few days since I last logged in.  Take care!  
    KR, Mark
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