Debt

[thatsmethatis]

Just had a conversation with a friend who is in debt. Debt began 5 years ago and he has never acknowledged this debt. He says that as long he continues to do this, after 6 years the debt will be wiped out. I have heard of this 6 year rule but, I thought it was only if the company you owe did not make contact with you as well as, you not making contact with them?

[Zacs-Master]

There is piece of legislation called statute barred. This refers to the Limitations Act.

This is the only real piece of debt law that could see your debt deemed unenforceable, after a period of six years.

Creditors are unable to legally pursue you for the debt if, after six years;

The creditor has not already obtained a county court judgment (CCJ)
You or any one else owing the money (on a debt in joint names) have not made a payment
You have not written to the creditor admitting you owe the debt
- See more at: http://moneyaware.co.uk/2011/08/your-debts-written-off-is-it-too-good-to-be-true/#sthash.2JId450r.dpuf

[tonywiltshire]

I agree absolutely with Z-M, if handled properly and the loan not secured it will be statute barred under the Limitations Act 1980. If secured the lender has 12 years to recover the principle sum but not the interest, after a period of uncertainty this went to the House of Lords who have now resolved the matter, It is critical this is handled correctly.

[bednobs]

However it doesn't mean the debt is wiped out. It still exists and they can still ask you for it, they just cant get a court order on it

[factor-fiction]

Another factor is whether he has changed address and not notified them.

Also, even though they may not have started legal proceedings yet, they still have time to do so within the next 12 months

[joko]

if they have been chasing him for it, then merely ignoring the letters is not going work. it needs to be if they have made no effort to get it off him

if it was that easy lots of people would do it.

[tonywiltshire]

The limitation period for the secured capital sum is 12 years from the date when the sum became payable under the terms of the mortgage deed but 6 years for the interest from the date when the lender had the right to receive the interest. An express provision under which the borrower agrees to pay the shortfall does not give the lender the right to start action.

As stated it is critical this is handled correctly, there may be a mortgage indemnity guarantee the lender who provides the MIG can pursue the borrower for the money paid out on his behalf under a process known as subrogation, these claims must be dealt with.

[themas]

joko - no. What the creditor does or doesn't do is not relevant. It is what the debtor does or doesn't do that matters.

[factor-fiction]

Is that the right way round, themas?

[joko]

themas -?

are you suggesting that simply ignoring a debt means you don't have to pay it?
that you can safely ignore all bills etc?

[themas]

joko - no, I'm not. For a start the creditor has 6 years to get a CCJ & then enforce it. Most of them wouldn't wait that long or anything like it. Even if the 6 years has expired you still owe the debt, can still be chased for it & it can still muck up your credit rating. The only change is that the creditor cannot go to Court to get a CCJ if 6 years has elapsed since the last payment on the debt or - if later - since the last time you (the debtor) acknowledged in writing that it is owed.

The creditor can write to you as many times as he likes during the six years. If you ignore everything, make no payments & do not acknowledge the debt then he cannot go to Court once the 6 years is up. That is all I was saying. [In my view the creditor is a bit of a mug if he doesn't bother to get a CCJ during the 6 years.]

[tonywiltshire]

Well done themas the position is as you say the limitation period for non-secured debts is 6 years, It is still a debt but not actionable. Do not overlook that a secured loan is not statute barred for 12 years but only the Capital sum and it is vital that the borrower does not acknowledge by any means or make any payment during the period prior to it being statute barred or it is necessary to start again, but once the limitation period is past it cannot be started again by payments or acknowledgements.