Statute barred debts. Are my debts written off? When does a debt become statute barred or prescribed? However, they may still be able to take other action depending on the type of debt.
In Scotland: If the creditor waits too long, the debt will become prescribed. How long before a debt is written off? This means HMRC can take you to court for these debts even if they date back many years If the creditor has already started action to obtain a court judgment or order before the limitation period passed the debt can never become statute-barred. In Scotland: For most types of debt in Scotland, the prescription period is five years. How do I know if my debt is statute barred or prescribed?
That date is which of the following happened most recently : The last time you wrote to the creditor acknowledging that you owed the debt The last time you made a payment to the debt The earliest date the creditor could have started court action The last time you wrote to the creditor acknowledging that you owed the debt This needs to be a signed letter from you to the creditor.
The earliest date the creditor could have started court action to recover the debt This will vary depending on the type of debt. We're here to help. Use our free online debt advice tool. What can a creditor do after the limitation period has passed? Money worries? Find out how we can help you.
Related articles What if I ignore my debts? Can I be forced to repay my debts? What is the time limit for recovering debt? Different time limits for writing off debt Court decrees A court decree is a money judgement made by the sheriff court that you owe your creditor a sum of money. State benefits Sometimes the Department for Work and Pensions DWP makes a decision that an individual has received too much in benefits.
Council tax The time limit for local authorities to collect council tax arrears is 20 years. Mortgage shortfalls Contradicting views exist on some repayments, and whether you can claim that money owed is now statute barred.
Seek professional guidance when responding to creditors If one of your creditors is chasing you for payment of a debt that you believe is statute barred, you should seek professional advice straight away, to make sure that you respond in the correct way.
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The position is generally accepted to be that prescription begins running when the demand for payment is made. In relation to the suggestion you make that the money was not given as a loan, generally speaking the position in Scots Law is there is a presumption against gift, so the onus is on you to show why the money was given if your argument is it was not a loan.
As I have not acknowledged the debt or answered the letters, would I be right that I can write to them in October using a sample letter stating that time has run out to recover the debt? Although Short Negative prescription is five years in Scotland, there are a number of factors you need to take into consideration.
The first is when did the prescription begin running? You may want to find out when this happened first, by doing a credit check. Also, you may be better giving it six years to be on the safe side, as there has been a recent court decision where Sheriff Reid in Glasgow held a creditor could rely on the six year English Law Limitation rule in a Scottish Court, even when it involved a consumer debt.
The Sheriff disagreed and held as the difference was so slight and the contract said the governing law was English Law, it could apply. So a belt and braces approach may be waiting 6 years from the date the account went into default. I have had a letter through the door from the sheriff court for a council tax bill I knew nothing about.
This may sound strange, but I think the reason they have not approached you before about this debt is because after you left your old address, you have been diligently paying your council tax.
If you had got into arrears with other council tax bills after you moved, and entered into a repayment plan with them, they would have asked for your previous addresses and linked your accounts. Interest is not normally added unless a different procedure is used, which it rarely is. However, if the council has previously instructed Sheriff Officers to try and recover it using attachments , Bank Arrestments , Earning Arrestments or a Charge for Payment , their fees may have been added.
You may want to check you were liable to pay council tax at the time: were you a student? You may have been able to apply for an exemption. Or if you lived on your own, you may have been entitled to a single person discount. Some council may allow these discounts and exemptions to be backdated, but may have time limits as to how far they will allow a backdate to go.
You can find out by visiting your local authority website. If you are liable for it, you will have to pay it. However, you want to avoid the types of enforcement action I have mentioned above. I would normally recommend you contact the Council first and verify you owe the money and ask them if they will enter a repayment arrangement with you, where you pay your current council tax and an amount on top of that to the arrears.
They may tell you that you have to speak to the debt management company, who could in actual fact be Sheriff Officers. You may want to read my page on them. If you do have to contact them they may ask for ridiculous amounts and tell you that you need to pay it all immediately.
Tell them you cannot afford this if this is the case. Tell them you will also have to pay your current council tax also this should always be your priorty, otherwise your arrears will just increase. If you feel they are being unreasonable and you are getting nowhere, tell them you will need to seek advice from a money adviser and get an income and expenditure done to see what you can reasonably afford.
You can go back to the Council and ask them to do this also, and ask whilst you are doing so, that they give you the contact details for your local free money advice service.
They should help you. Alternatively, you can find your local Citizen Advice Bureau here. Be careful not to disclose too much information until you have agreed an arrangement, such as where you bank, where you are employed or if you have a car.
If they come to an agreement, they may want this information, so if you stop paying they can use the above types of recovery action against you. However, do not volunteer it at this stage until they agree to enter a reasonable repayment plan with you.
If you feel you are getting nowhere, just ask they give you time to speak to a money adviser. If you think they are going to use any of the above recovery actions against you, you can apply for a Statutory Moratorium , which gives you six week protection to allow you to seek advice.
You can only use this once a year, so before you do so, I always recommend you speak to a money adviser first, in case it is not necessary at this stage, but may be later.
I hope this helps you out. They are allowed to arrest your bank account, but if it is possible to show the only funds in that account are social security benefits, you can argue the arrestment is incompetent as the law protects social security benefits. If the funds have been mixed in with other funds, then this argument may not be available as the argument is that the mixing of benefit income with other income means it loses the protections.
However, as is always the case, it may not be straightforward as the lender who has arrested the funds may argue the protection for benefits no longer applies in Scotland in relation to bank arrestments. If this is the case it may be necessary to raise a court action to release the funds. Your local authority money advice agency will help with this even if it was the council that arrested the funds or your local Citizen Advice Bureau you can find them here.
I am aware of cases in recent months in different parts of Scotland where this has happened and the creditor has refused to release the funds. However, they have been challenged in court and backed down because I understand a legal opinion has been written saying they cannot arrest benefits. It is a strong but complicated legal argument. I would suggest you contact your local money advice agency see above and get advice. Hopefully they can get your money back without it going to court.
If they are having problems, you may want to suggest they contact me as I can help with the legal arguments if they need it. Can a commercial landlord who increased the rent by rent review in November , but never processed collection, now demand arrears from ?
Rent arrears are generally covered by the five year prescription rule, so after five years, providing no relevant claim has been made by the landlord and no relevant acknowledgement has been made by the tenant, the debt can prescribe. Further to my comments above, I have become aware today of a recent decision of the Scottish Sheriff Appeals Court, which addresses the question of when the five year prescriptive period begins to run.
You can see my post about this here. This case concerned a consumer credit debt, but in terms of rent owed to a commercial lease, it will depend not only on the terms of the lease, but also when the court would consider the money to be payable. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. This site uses Akismet to reduce spam.
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After this time any remaining debt will be wiped out. Sequestration is the Scottish version of bankruptcy and may be suitable for you if you do not have the money to pay back your debts. When a company is wound up it means it permanently closes down, and creditors repaid as far as monies allow. The winding up process in Scotland is set out in the Insolvency Act, , Sections The Debt Arrangement Scheme in Scotland, or DAS, enables people in serious debt to repay their creditors in full over a longer period of time.
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Open Menu. For a debt to be statute barred after the five-year timescale in Scotland, the following must also apply during this time period: The debt has not been acknowledged by the debtor There are no decrees on the debt The creditor has not made contact about the amount owed No repayments have been made If the debt is in joint names, the criteria for statute barring also applies to the other party and they must meet the criteria described above.
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