What is Statute Barred Debt?
Find out about statute barred debt including what it means, when debt becomes statute barred, and how you can work with Lowell to clear your debt.
Here at Lowell, we're all about being open and honest with our customers and understand that sometimes you might need help finding useful information about debt.
We know that debt can be a complicated process, with lots of different terms and jargon. You might have heard the term 'statute barred debt' used before and wondered what it meant. To help, we have created this straightforward guide to help you understand all about statute barred debt and answer the most common questions on the topic.
So, carry on reading to find out exactly:
- What statute barred debt is
- When a debt is statute barred
- What happens if your debt is statute barred
- How you can work with us to become debt-free with Lowell
Before we get started: This can be a complicated area of law, and the position varies depending on the type of debt and the contract you entered into with your creditor.
The information set out here does not constitute legal advice, which you should independently obtain to confirm the position which applies to your debt.
What does statute barred debt mean?
In simple terms, if no effort is made to recover a debt, then after a certain period of time it becomes 'statute barred'. This means that in England and Wales the debt can no longer be recovered through court action. In Scotland, the debt becomes 'prescribed' which means that the debt no longer exists.
However, it's very important to note that statute-barred debt still exists and it may appear on your credit reference file. That's why it's important that you don't just ignore your debts in the hope that they will eventually disappear. Choosing this route can potentially have severe consequences for your financial health, and it could make it harder to obtain credit in the future.
At Lowell, we put our customers first and are more than happy to work around you and your personal circumstances. If you receive a letter or a call from us about a statute-barred debt, the best thing to do is to get in touch with us to discuss your options.
It's important that you don’t just ignore your debts in the hope that they will eventually disappear. Choosing this route can potentially have severe consequences for your financial health, and it could make it harder to obtain credit in the future.
When does a debt become statute barred?
In the UK, if you have a debt there is a statute of limitations and legislation which sets out rules on how long a creditor has to take action to recover a debt. This period is sometimes better known as the 'limitation period' and can vary depending on the type of debt you have.
For anyone in England, Wales and Northern Ireland the limitation period is typically six years. This is the case for a lot of the common types of debt, including:
- Credit or store cards
- Personal loans
- Utilities (gas or electric)
- Council tax
- Benefit overpayments
- Payday loans
- Overdue rent
- Catalogue loans
In Scotland, things are a little bit different and debt doesn’t become statute barred but ‘prescribed’ meaning that they no longer exist. If you’re looking to find out more information about statute barred debts in Scotland visit National Debtline.
Are there any exceptions to the six-year limitation period?
Yes, there are some exceptions to the six-year limitation period.
For example, overdue mortgage payments have a longer limitation period of 12 years, although interest can only be added for six years. Personal injury claims are shorter at just three years and debts such as income tax, VAT, and capital gains tax owed to HMRC don’t have any limitation period at all.
Most importantly, if the process to get a County Court Judgment (CCJ) has already started before the end of the limitation period, then the debt can never become statute-barred. If you’re unsure about what a CCJ is and want to find out more, check out our guide to CCJs which has all the information you need to know.
As mentioned, debt works slightly differently in Scotland and most common types of debt become prescribed after a shorter period of five years instead.
When does the limitation period begin?
According to the Limitation Act 1980, the limitation period starts running from the 'cause of action.'
Cause of action refers to the point at which a creditor could take court action over a debt.
For some agreements, this will be after a default notice has been sent to you and then expired but what this means can vary based on your circumstances and the type of debt.
If you want further information then you can check out National Debtline's fact sheet on statute barred debt which explains a bit more about when the 'cause of action' will be, or you can get in touch with them directly for more advice.
Is my debt with Lowell statute barred?
After purchasing your debt, a debt company like Lowell will reach out to let you know that they now own the debt and that it is no longer with the original company you borrowed from.
How do I know if my debt with Lowell is statute barred?
If you think that there is a possibility that your debt with Lowell is statute barred, please call us on 0333 556 5552.
As a customer of Lowell, we want to work with you and try to figure out the best way to help you clear your debt with Lowell. We appreciate that being in debt can be stressful, but we’re here to support you and want to set up a payment plan that is affordable and based on your personal circumstances.
If you receive a letter or call from us about a statute-barred debt, the best thing to do is to get in touch with us to discuss your options.
Can I be contacted about statute barred debt?
While a creditor like Lowell will no longer be able to a get a County Court Judgment (CCJ) once a debt is statute barred, we can still contact you to ask for payments or take further action that doesn’t involve going to court. We also have an obligation to notify you if we become the owners of a debt that is statute barred.
Can I ignore companies getting in touch about a statute barred debt?
We understand that being contacted about debt can feel overwhelming, but ignoring any communication might not always be right (depending on your circumstances).
At Lowell, we want to ease your worries and work with you, so we’d recommend getting in touch with us so we can work together. And if you’re still curious and want to find out more on this topic, check out our guide on what happens if you ignore a debt company.
Whatever your circumstances may be, as a customer of Lowell, we’re here to listen and want to support you in any way we can on your journey to becoming debt-free with Lowell.
First Published: 23rd August, 2022
If you're a Lowell customer and you have concerns or queries about your debt with us, then please do get in touch. Our friendly and supportive team will be more than happy to help.