Statute barred debts and the Limitation Acts

fermi · 20 July 2010 at 12:17PM

Statute Barred debts.

A debt will be "Statute Barred" if there has been no acknowledgement of the debt by you making a payment or in writing within the relevant limitation period.

The debt would then be legally UNENFORCEABLE.

UPDATE 2019 :

I'm posting this important Court of Appeal judgment since it impacts on the legal interpretation of when a debt is Statute Barred regardless of the last payment or acknowledgement.

You'll see that the Default is now relevant > http://www.bailii.org/ew/cases/EWCA/Civ/2019/12.html

Lower courts (District Judges in county courts) must follow the decision of a Higher court (Court Of Appeal).

If you are in England/Wales then the limitation period is 6 years and you should read:

Link: Factsheet | Liability for Debts and the Limitation Act (England/Wales)

If you are in Scotland then the limitation period is 5 years and you should read:

Link: Factsheet | Liability for debts & the Prescription & Limitation (Scotland) Act 1973

If you feel the debt is "Statute Barred", then there is a letter to write at the end of each factsheet and below.

fermi · 20 July 2010 at 12:50PM

Letter to use if you live in England or Wales.

1 High Street,
Newtown,
Kent
R21 4RH
Date

The Loan Company
Company House,
Church Street,
Newtown,
Kent,
R1 7HG

I do not acknowledge any debt to you or any other company or organisation that you claim to be representing.

Dear Sir/Madam

Account No: xxxxxxxxxxx

You have contacted me regarding the account with the above reference number, which you claim is owed by myself.

I would point out that under the Limitation Act 1980 Section 5:

“An action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued.”

I would point out that in their Consumer Credit sourcebook, the Financial Conduct Authority states the following rules:

"...a firm must not attempt to recover a statute barred debt in England, Wales or Northern Ireland if the lender or owner has not been in contact with the customer during the limitation period." 7.15.4

"A firm must not continue to demand payment from a customer after the customer has stated that he will not be paying the debt because it is statute barred." 7.15.8

The last payment or acknowledgement of this debt was made over six years ago and no further acknowledgement or payment has been made since that time. Unless you can provide evidence of payment or written acknowledgement from me in the relevant period under Section 5 of the Limitation Act, I suggest that you are no longer able to take any court action against me to recover the alleged amount claimed.

I await your written confirmation that no further contact will be made concerning the above account and confirmation that this matter is now closed.

I look forward to hearing from you.

Yours faithfully

Mrs A N Other

fermi · 20 July 2010 at 12:51PM

Letter to use if you live in Scotland.

1 High Street,
Newtown,
Kent
R21 4RH
Date

The Loan Company
Company House,
Church Street,
Newtown,
Kent,
R1 7HG

I do not acknowledge any debt to you or any other company or organisation that you claim to be representing.

Dear Sir/Madam

Account No: xxxxxxxxxxxxxx

You have contacted me regarding the account with the above reference number, which you claim is owed by myself.

I would point out that The Prescription and Limitation (Scotland) Act 1973 Part 1, Section 6 states as follows.

“If after the appropriate date, an obligation to which this section applies (an appropriate debt) has subsisted for a continuous period of five years-

(a) without any relevant claim having been made in relation to the obligation, and
(b) without the subsistence of the obligation having been relevantly acknowledged,

then as from the expiration of that period the obligation shall be extinguished…”

I would also point out that, in their Consumer Credit sourcebook, the Financial Conduct Authority states the following:

"In Scotland, a statute barred debt ceases to exist and is no longer recoverable if:
(1) a relevant claim on behalf of the lender or owner has not been made during the relevant limitation period; and
(2) the debt has not been acknowledged by, or on behalf of, the customer during the relevant limitation period." 7.15.3

"A firm must not continue to demand payment from a customer after the customer has stated that he will not be paying the debt because it is statute barred." 7.15.8

The last of this debt was made over five years ago and no further acknowledgement or payment has been made since that time. Unless you can provide evidence of payment or written contact from me in the relevant period under Part 1 Section 6 of the above Act, I suggest that you are no longer able to take any court action against me to recover the alleged amount claimed as the debt is extinguished.

I await your written confirmation that no further contact will be made concerning the above account and confirmation that this matter is now closed.

I look forward to hearing from you.

Yours faithfully

Mrs A N Other

fermi · 20 July 2010 at 12:51PM

Possible letter if previous letters are ignored.

Report them to the FCA and Trading Standards as well.

I do not acknowledge any debt to you or any other company or organisation that you claim to be representing.

Acc/Ref No: *******************

FORMAL COMPLAINT under the complaint procedures set out by the Financial Ombudsman.

Thank you for your letter dated xx/xx/2008, the contents of which are noted.

On xx/xx/2008 I wrote to <Name of debt collector> regarding a debt that was alleged to be owed by myself. That letter was received and signed for on xx/xx/2008 as confirmed by Royal Mail tracking.

In this letter I pointed out the following items:
1) Under the Limitation Act 1980 Section 5 "an action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued".

2) The FCA say in their Consumer Credit sourcebook "...a firm must not attempt to recover a statute barred debt in England, Wales or Northern Ireland if the lender or owner has not been in contact with the customer during the limitation period." 7.15.4

3) The last correspondence/payment/acknowledgement or payment of this debt was made over six years ago and no further acknowledgement or payment has been made since that time. Unless you can provide evidence of payment or written contact from me in the relevant period under Section 5 of the Limitation Act, I suggest that you are no longer able to take any court action against me to recover the alleged amount claimed.

4) The FCA Consumer Credit sourcebook states further that "A firm must not continue to demand payment from a customer after the customer has stated that he will not be paying the debt because it is statute barred." 7.15.
Therefore it is clear that your original contact regarding this debt may well have been in breach of the FCA Rules referred to in item (2).

Furthermore, your second letter is in breach of the FCA Rule referred to in item (4) and constitutes harassment.

As you are no doubt aware, breaches of the FCA Rules are treated seriously by the FCA when considering your fitness to hold a Authorisation with the FCA.

Therefore I wish to formally notify you that unless I received confirmation that this matter is now closed, then I will not hesitate to make a formal complaint to the 'FCA' and also to 'Trading Standards'.

Furthermore, any attempted contact (other than to confirm that this matter is now closed) by any:
"trading style" of the <Name of debt collector> group

constituent member of the <Name of debt collector> group

a third party acting on your behalf

a third party that claims to have been legally assigned this debt

will result in an immediate complaint to the aforementioned regulatory bodies.

Also please note that any legal action you may consider will be FULLY and VIGOROUSLY defended, and you will be put to a strict proof of the alleged debt and any payment or acknowledgement that you claim within the relevant limitation period.

In line with the protocols on pre-action conduct, I therefore request a independently verifiable copy of any acknowledgement or payment that you may claim was made within the limitation period. Failure to comply with this reasonable request will result in your actions being brought to the attention of the court.

Furthermore, you may consider this letter a FORMAL COMPLAINT under the complaint procedures set out by the Financial Ombudsman. If you wish to correspond with myself with any other purpose than to confirm that this matter is now closed, then I require you to supply me with a written copy of your complaints procedure and a "final response" that I may forward to the Financial Ombudsman with my complaint.

This COMPLAINT is not going to go away and ignoring this problem could potentially make your situation worse. I therefore strongly recommend that you send written confirmation that no further contact will be made concerning the above account and confirmation that this matter is now closed.

I would appreciate your due diligence in this matter.

fermi · 20 July 2010 at 12:51PM

Hybrid letter stating that you have no knowledge of the debt AND that it would be statute barred regardless.

I do not acknowledge any debt to you or any other company or organisation that you claim to be representing.

Dear Sir/Madam

Reference number :

You have contacted me regarding the account with the above reference number, which you claim is owed by myself.

I would point out that we have no knowledge of any such debt being owed to <creditor>.

I am familiar with the Consumer Credit sourcebook of the Financial Conduct Authority (FCA) which states the following rules.

"A firm must not ignore or disregard a customer's claim that a debt has been settled or is disputed and must not continue to make demands for payment without providing clear justification and/or evidence as to why the customer's claim is not valid." 7.5.3

"A firm must suspend any steps it takes or its agent takes in the recovery of a debt from a customer where the customer disputes the debt on valid grounds or what may be valid grounds." 7.14.1

"Where a customer disputes a debt on valid grounds or what may be valid grounds, the firm must investigate the dispute and provide details of the debt to the customer in a timely manner." 7.14.3

In not ceasing collection activity whilst investigating a reasonably queried or disputed debt you are using deceptive/and or unfair methods.

Furthermore, ignoring and/or disregarding claims that debts have been settled or are disputed and continuing to make unjustified demands for payment amounts to physical/psychological harassment.

We would further note that based on the information you have supplied, this account would also be statute barred under the Limitation Act 1980

Under the Limitation Act 1980 Section 5 "an action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued".

I would also point out that in their Consumer Credit sourcebook, the Financial Conduct Authority states the following rules:

"...a firm must not attempt to recover a statute barred debt in England, Wales or Northern Ireland if the lender or owner has not been in contact with the customer during the limitation period." 7.15.4

"A firm must not continue to demand payment from a customer after the customer has stated that he will not be paying the debt because it is statute barred." 7.15.8

We would ask that no further contact be made concerning the above accounts unless you can provide evidence of both:

(1) proof of my liability regarding this debt.

and

(2) payment or written acknowledgement from me in the relevant period under Section 5 of the Limitation Act.

We await your written confirmation that this matter is now closed.

Otherwise we will have no option but to make a complaint to the trading standards department and consider informing the FCA of your actions.

YOU MUST ALSO TREAT THIS AS A FORMAL COMPLAINT, AND AS SUCH I REQUIRE A COPY OF YOUR COMPLAINTS PROCEDURE AND A RESPONSE TO TAKE TO THE FINANCIAL OMBUDSMAN.

I look forward to your reply.

Yours faithfully

Mrs A N Other

fermi · 20 July 2010 at 12:52PM

Where a debt is statute barred due to 6 years of non-payment or acknowledgement, but you have made payments/acknowledgement after that 6 years has elapsed.

Note: Once a debt becomes statute barred it stays that way permanently.

Once barred, any payment or acknowledgement does NOT 'unbar' it.

1 High Street,
Newtown,
Kent
R21 4RH
Date

The Loan Company
Company House,
Church Street,
Newtown,
Kent,
R1 7HG

I do not acknowledge any debt to you or any other company or organisation that you claim to be representing.

Dear Sir/Madam

Account No:

You have contacted me/us regarding the account with the above reference number, which you claim is owed by myself/ourselves.

I would point out that under the Limitation Act 1980 Section 5:

“An action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued.”

< insert ONLY if required...

I note that you have claimed that a payment or acknowledgement made after the limitation period has expired means that a debt is no longer statute barred.

That appears to be a deliberate attempt to mislead and misrepresent the correct legal position, contrary to FCA Rules. I will be reporting this deceptive conduct and will bring it to the attention of the court if required.>

The Limitation Act 1980 clearly states:

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

It is clear that there was a period of 6 years where no acknowledgement or payment of this debt was made.

<Give dates if you have them>

Consequently this debt is and remains statute barred under the Limitation Act 1980.

Unless you can provide evidence of payment or written acknowledgement from me/us in the relevant period under Section 5 of the Limitation Act, I/we suggest that you are no longer able to take any court action against me/us to recover the alleged amount claimed.

I would also point out that in their Consumer Credit sourcebook, the Financial Conduct Authority states the following rules:

"...a firm must not attempt to recover a statute barred debt in England, Wales or Northern Ireland if the lender or owner has not been in contact with the customer during the limitation period." 7.15.4

"A firm must not continue to demand payment from a customer after the customer has stated that he will not be paying the debt because it is statute barred." 7.15.8

I/we await your written confirmation that no further contact will be made concerning the above account and confirmation that this matter is now closed.

I/we look forward to your reply.

Yours faithfully

fermi · 20 July 2010 at 12:53PM

A debt collector FALSELY claims that a phone call counts as acknowledgement.

or

A debt collector FALSELY claims that the creditor writing to you counts as acknowledgement.

There is nothing at all in the Limitation Act 1980 that allows the period to be restarted by the creditor contacting the debtor, or by a phone call.

Limitation Act 1980

The debtor must either acknowledge the debt in writing or make a payment.

As specified in Section 29 here:

Extension or Exclusion of Ordinary Time Limits

(5) Subject to subsection (6) below, where any right of action has accrued to recover—

(a) any debt or other liquidated pecuniary claim; or

(b) any claim to the personal estate of a deceased person or to any share or interest in any such estate;

and the person liable or accountable for the claim acknowledges the claim or makes any payment in respect of it the right shall be treated as having accrued on and not before the date of the acknowledgment or payment.

Notice that it is the person liable that must make the acknowledgement, NOT anyone else.

So a creditor writing to you or contacting you DOES NOT COUNT.

As for the claim that a phone call may count as acknowledgement, that is disproved completely as the act specifically requires in section 30 that:

To be effective for the purposes of section 29 of this Act, an acknowledgment must be in writing and signed by the person making it.

So no, a phone call cannot possibly count.

fermi · 20 July 2010 at 12:54PM

Possible letter if they claim a payment or acknowledgement was made..

I do not acknowledge any debt to you or any other company or organisation that you claim to be representing.

Acc/Ref No: *******************

FORMAL COMPLAINT under the complaint procedures set out by the Financial Ombudsman.

Thank you for your letter dated xx/xx/2008, the contents of which are noted.

On xx/xx/2008 I wrote to <Name of debt collector> regarding a debt that was alleged to be owed by myself. That letter was received and signed for on xx/xx/2008 as confirmed by Royal Mail tracking.

In this letter I pointed out this account is statute barred under Limitation Act 1980 Section 5.

I note that you claim a payment/acknowledgement was made my myself on xx/xx/20xxx.

No such payment/acknowledgement was made by myself.

In line with the protocols on pre-action conduct, I therefore demand that you supply a independently verifiable copy of any acknowledgement or payment that you may claim was made by myself within the limitation period.

Note: This must be proof of the original payment and it's origin.

This is, but is is not limited to, actual proof of:

- Type and method of payment
- Name, bank, and account or card number of the payer
- Reference number of the transaction
- Copy and number of any cheque, Postal Order or instrument.
- Place of payment - branch, online, cheque by post etc

A unverifiable list, or statement, or spreadsheet of alleged payments is NOT acceptable proof, and any attempt to pass off such a document as proof will be reported to the FCA, trading standards, and other authorities as a deceptive practice.

It may also be reported to the police as attempted fraud by misrepresentation.

Furthermore, failure to comply with this reasonable request will result in your actions being brought to the attention of the court.

Any attempt to avoid providing proof will be NOT be tolerated.

Any collection activity while the proof is outstanding will be reported, as will any attempt to pass off insufficient or misleading proof.

Also please note that any legal action you may consider will be FULLY and VIGOROUSLY defended, and you will be put to a strict proof of the alleged debt and any payment or acknowledgement that you claim within the relevant limitation period.

Furthermore, you may consider this letter a FORMAL COMPLAINT under the complaint procedures set out by the Financial Ombudsman. If you wish to correspond with myself with any other purpose than to confirm that this matter is now closed, then I require you to supply me with a written copy of your complaints procedure and a "final response" that I may forward to the Financial Ombudsman with my complaint.

For reference:
1) Under the Limitation Act 1980 Section 5 "an action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued".

2) The FCA say in their Consumer Credit sourcebook "...a firm must not attempt to recover a statute barred debt in England, Wales or Northern Ireland if the lender or owner has not been in contact with the customer during the limitation period." 7.15.4

3) The last correspondence/payment/acknowledgement or payment of this debt was made over six years ago and no further acknowledgement or payment has been made since that time. Unless you can provide evidence of payment or written contact from me in the relevant period under Section 5 of the Limitation Act, I suggest that you are no longer able to take any court action against me to recover the alleged amount claimed.

4) The FCA Consumer Credit sourcebook states further that "A firm must not continue to demand payment from a customer after the customer has stated that he will not be paying the debt because it is statute barred." 7.15.
This COMPLAINT is not going to go away and ignoring this problem could potentially make your situation worse. I therefore strongly recommend that you send written confirmation that no further contact will be made concerning the above account and confirmation that this matter is now closed.

I would appreciate your due diligence in this matter.

RAS · 20 July 2010 at 1:55PM

Can I suggest that somewhere prominent we put that the SoL does not apply if you have a CCJ against you for the debt, although if the creditor has not enforced it in the last 6 years, they cannot just start now?

fermi · 20 July 2010 at 2:03PM

RAS wrote: »

Can I suggest that somewhere prominent we put that the SoL does not apply if you have a CCJ against you for the debt, although if the creditor has not enforced it in the last 6 years, they cannot just start now?

Will do. Now I've separated the letters out into different posts, I need to revise the initial post as well.

Tixy · 28 July 2010 at 8:49PM

If you have paid the original creditor or any 3rd party/debt collection agency acting on their behalf or a DCA who they have sold the debt to within 6years from when you ceased payment then that counts as acknowledgement by you for the debt. And you would then need to have another 6years from the date of last payment to anyone including the DCA.

Statute barred debts and the Limitation Acts

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