The Limitation Act of 1980 stipulates how long a creditor is allowed to pursue an individual for an unpaid debt in England and Wales. It only applies in those instances when no contact has been made between the creditor and debtor for a certain period of time. This time limit depends on what type of debt it is. For unsecured loans, the time limit is six years. In the event that the debtor acknowledges the debt in writing or an installment is paid within the original limitation period, then the time limit will begin again from the date of acknowledgment or the payment date.
When a Creditor can pursue an unsecured debt.
In the event that the creditor has not contacted the debtor for a period exceeding six years, then the debtor may well be able to claim that the outstanding debt is Statute Barred under the conditions of the Limitations Act. What this means is that the creditor is forbidden from using the legal system as a means of getting payment.
You may think that a creditor has written off a debt if you have not heard from them for a long time. If you have failed to tell the creditor of an address change, then the debt is still in effect and the creditor is entitled to chase payment indefinitely.
County Court Judgments
If the creditor has previously taken the debtor to court and a CCJ has been awarded, the debtor will not be able to use the Limitations Act 1980 to dispute the debt. If the CCJ is over 6 years old, the creditor will need the permission of the Court to enforce the debt.
What to do if a creditor contacts you after 6 years or over.
Don't admit to owing the debt. Once you acknowledge the debt (in writing) you are required to pay the debt back. If part payment is made, even after a 6-year gap, the Limitations Act 1980 won't be enforceable and the debt will have to be paid back.
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