Are you wondering what is a statute-barred debt too? According to the dictionary, statute-barred debt is defined as a debt that is not legally enforceable any longer when it does not own a prescribed limitation period. In simple words, we can say that statute-barred debt refers to an old debt that has now come to a limit that makes it a no longer enforceable debt.
When the debt becomes statute-barred, the time is now right for the creditor to seek certain action against the individual. The court action is one such example. This will enforce the person to clear the payment under the action of the limitation act. Further in the discussion of this article, you will develop an understanding of the introduction of statute-barred debt and the time limit for unsecured debts.
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What Is A Statute-Barred Debt?
When it comes to the introduction of statute-barred debt, it refers to the kind of debt that has come to a limit that the creditor can not recover or chase according to the rules of law. According to the limitation act law, there is a certain limit of time that allows the creditor to chase the amount that he owes. The creditor can only adhere to this amount for a certain period until the debt is old enough that it can not be chased anymore.
This time duration is known as the limitation period. In case the debt comes to a dormant scenario, and no acknowledgement of payment has been made for a long period, the amount of the debt is no more liable as a recovery amount. After a certain time, legal court action is even no longer an option to chase the amount of the debt for recovery. Moreover, this is important to realise that the debt is still in the form of existing but legal action can not be taken to recover it.
In such a case the creditors tend to seek help from the private debt-chasing agencies to recover the amount of debt. However, the creditors should keep in mind that the chasing of debt amount is not enforced according to the law. There will not be any help provided by the law and you can not make anyone forced to make the payments clear. In most of the UK areas, the same rule is being followed. But there are some exceptions in Scotland.
Unsecured Debts and Their Time Limit
Unsecured debts also refer to the kind of debts that are simple contract debts. This includes the debts related to the following:
- Rent Arrears
- Benefit Overpayments
- Council tax arrears
- Utility Bills
- Personal Loans
- Catalogue Repayments
- Payday Loans
- Credit cards
Furthermore, a few exceptions have been noticed with debts according to their time limits. Personal injury is one such example of reception and its time limitation is three years. The limitation of unsecured debts is different in the UK and even short time limit in the case of Scotland. This difference in time limitation depends on the agreement of the court when it orders to begin the legal action for the sake of recovery. After the expiry of the default period, agreements and terms can vary from situation to situation. In case your limitation period has started, the case of unsecured debt will be statute-barred in case of the following:
- Written acknowledgement of the debt was not provided while the limitation period was going on.
- The payment is not cleared in the limitation period.
- There is no claim through the court by the creditor.
The Bottom Line
Now that you have gathered a fair amount of information about what is a statute-barred debt, we can bring the discussion towards wrapping up. We can sum up by saying that if the case of statute-barred debt is not handled professionally, the chances are more likely to lose the amount and you will not be able to chase the amount of debt any longer. We hope these few minutes of reading have helped you to develop a better understanding of chasing your amount and recover before it’s too late for you.
Get in touch with one of our professionals to learn more about statute-barred debt. We will love to hear out your queries and provide instant solutions.
Disclaimer: The information about what is a statute-barred debt provided in this blog including text and graphics in general. This does not intend to disregard any of the professional advice.