Statute barred debts: The facts.
Byline: YOUR VIEW TODAY: Joe Michna, manager, Citizens Advice Hartlepool A chance for local charities, voluntary organisations and advice groups to reach our readers
Q. What does statute barred mean in relation to debts? A. There are time limits on when some creditors can go to court to get you to pay an old debt. If the time limit has passed, the debt is known as "statute barred" - it means the creditor cannot get a court order to force you to pay the debt.
Q. What debts does this apply to? A. The statute barred laws refer to debts from sources such as: | Credit cards; | Personal loans; | Store cards; | Bank loans; | Finance company loans, and | Utility bills. There are different rules for debts from other sources, eg tax and benefit overpayments or mortgage shortfalls.
Q. When is a debt statute barred? A. A debt will be statute barred if you, someone representing you, or someone else you held the account with, has not: | Made a payment for six years; | Written to the creditor acknowledging the debt, or | Had a county court judgment against you for the debt in the last six years.
A statute barred debt does not disappear. But if a debt is statute barred the creditor cannot get a court order to force you to pay the debt. The debt could affect your credit rating, making it harder for you to get credit or a loan in future.
Q. What should you do if you are chased for a statute barred debt? A. There are rules and guidance that say a creditor must not demand payment for a statue barred debt if you say you will not be paying the debt because it is statute barred. A company should not threaten you with court action if the debt is statute barred, because court action is not actually possible. Q. Do I still have to pay a statute barred debt? A. The rules on statute barred debts do not mean that the debt has gone away. All they do is prevent a creditor from taking you to court to get the money. If you know that you owe the money and can afford to do so, you can choose to pay it back when you are able to. This will probably be good for your credit rating.
For further advice contact your local Citizens Advice office. There are offices in Darlington, Hartlepool, Middlesbrough, Redcar and Cleveland and Stockton.