Can I Be Chased for Debt After 10 Years in the UK?
We talk to lots of people about debt, and we’re often asked how long creditors (the people or companies you owe money to) can keep chasing what they’re owed and whether you’re in the clear after 10 years.
Unfortunately, there’s no quick answer. The length of time depends on lots of factors – including who you owe the money to, whether court action has been taken, where you live, and even whether or not you’ve recently admitted owing the money.
In this guide, we’ll break the subject down into bitesize chunks – so you can look at what the law says about different kinds of debt, how the rules vary based on where you live, and what you should do if you’re contacted about an old debt.
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Aren’t all debts written off after 6 years?
If you chat with friends or take a glance at website comments, you’ll often hear people suggest that debts are ‘written off’ or wiped from your credit history after 6 years. So, it would lead you to believe that after 10 years, your debts will be long gone.
The truth is actually much more complex than this. While it’s true that some entries on your credit file disappear after 6 years, it’s not as simple as having your entire financial history or money you owe wiped out if you wait long enough.
In fact, some debt can hang for much longer than 10 years.
We’ve started by addressing this point because it can often be very damaging to your financial health if you ignore debt hoping it will go away. This is almost never the case, and can lead to you owing much more than you originally signed up for.
It’s always better to understand what you owe, what the law says about the kind of debt you have, and exploring proper ways of dealing with the debt – or having it written off.
What does the law say about a time limit for debts?
What the law says about the timescales that debt can be chased for depends on where you live.
In England and Wales
There’s a part of the law that sets out guidelines for companies chasing debt. It’s called The Limitations Act 1980 and it applies in England and Wales.
If you’re a legal professional, this kind of act is referred to as a ‘statute of limitations’. For the rest of us, that simply means ‘how long the law can be applied for’.
A lot of the time, the law around chasing debts is limited to 6 years – hence the common belief that debt disappears after 6 years. However, there are exceptions to this and lots of action that creditors will take before that six year limitation period is up.
In Scotland, time limits around debts are governed by the The Prescriptions and Limitation (Scotland) Act, 1973.
Again, like the wording of the English and Welsh law, this is a ‘statute of limitations’ and sets out the timescales that the law can be applied for.
Most of the time, the Scottish statute of limitations for debt is 5 years. However, there are exceptions to this.
Different time limits for different debts
After a certain time period, lots of debt is ‘statute barred‘. Again, this is legal speak – but just means the debt is no longer covered by the law.
It’s really important to understand that the limitation period is different for different kinds of debt. The limitation periods also differ between England and Wales, and Scotland.
Debt time limits in England and Wales
Statute barred debt doesn’t disappear in England and Wales, it just means that the company you owe the money to has run out of time to explore legal options for recovering the debt. This usually means the company will consider the money lost and give up any action to get it back, since they will no longer be supported by the courts.
The exact time limit depends on the type of debt.
An unsecured debt is something that isn’t ‘secured’ against anything you own. Examples include:
- credit card debt
- personal loans
- payday loans
- store cards
Creditors sometimes lose contact with you about this kind of debt – especially if you move house or change your name. Even if you don’t hear from a creditor, this kind of debt still exists.
However, In England and Wales the creditor you owe cannot start legal proceedings to recover the debt if 6 years passed between your last payment or when you last admitted to owing the debt.
County Court Judgment (CCJ)
Most creditors will have a debt collection agency they work with to help them recover an outstanding debt that’s owed if you slip too far into arrears (missed payments).
However, if a debt collector still can’t get the money back, they’ll almost always take you to court – where a judge will decide if you owe the money and have to pay it back.
If you receive a County Court Judgment ordering you to repay a debt, the Limitation Act no longer applies, as a judge has put new orders in place. This means there is no time limit around chasing the debt.
Despite this, with County Court Judgments that are more than 6 years old, the creditor might need additional permission from the court to keep taking action to collect the debt.
Council Tax arrears
Like companies, local authorities have a full debt collection process – including sending letters and text, along with instructing debt collectors to try to recover money you owe for council tax bills.
If these methods of collecting council tax arrears don’t work, they may apply for something called a ‘liability order’ from the Court. If approved, this lets councils collect money directly from your wages or your benefits payments before the money gets to you.
If the council hasn’t done this within 6 years, the Limitations Act applies and they will not be able to successfully pursue court action.
However, there’s a big ‘but…’ to consider here. It’s extremely unlikely that a council won’t seek a liability order well before the 6 year limitation period has passed. This means they will almost always be able to collect owed money long before the debt is statute barred.
A mortgage shortfall is something that can happen when a property is repossessed by a mortgage lender. After the lender takes possession, they will sell the house – but if the amount the house sells for doesn’t cover what’s owed, then you are responsible for the difference.
There are lots of costs involved with repossessing a house – and since these costs are added to what you owe, you can quickly find yourself owing money, even if your house sells for a good price.
The debt that you owe to a mortgage company for this shortfall will not become statute barred for 12 years – much longer than unsecured debts.
Income Tax and VAT
If you owe money for either income tax or VAT to HM Revenue and Customs, they can chase your debt indefinitely. This rule applies in England, Wales and Scotland.
The Limitation Act does not apply to this kind of debt, so it will never be written off and HMRC will continue to try to collect debts for as long as there is money outstanding.
There are lots of reasons that benefits payments can end up incorrect. Sometimes these are honest mistakes – but other times, fraudulent claims are picked up on by the Department of Work & Pensions (DWP) and measures are taken to recover money.
If you find yourself owing money to the DWP, action will be taken to recover what’s owed for 6 years. It is possible for this to become a statute barred debt – but since the DWP have the ability to recover money directly from your benefits, it’s unlikely that any debt will ever get to the stage that it’s written off.
Time limits around debt in Scotland
Since debt time limits are governed by a different law in Scotland, the periods that certain debts can be chased for is also different.
Unlike the law in England and Wales, debt that becomes statute barred in Scotland is considered legally repaid or abandoned. So Scottish law protects you from and contact or harassment from the creditor.
The same as in England and Wales, unsecured debts cover things like personal loans, payday loans, credit card debts, and debts from things like energy bills.
In Scotland, these debts can be enforced for 5 years.
Decrees are very similar to County Court Judgments in England and Wales. Like CCJs, any debt that is subject to a degree has no time limit, so creditors can keep chasing you until the debt is settled or written off by a debt solution.
Mortgage arrears (capital)
According to Scottish law, different rules apply to different elements of a mortgage that are outstanding.
If you have a debt that relates to the ‘capital’ (the amount borrowed – not interest) then this debt can be chased for 20 years.
Mortgage arrears (interest)
If a mortgage lender is chasing you to repay debt that relates to interest charged on your mortgage, they have 5 years before this debt is statute barred.
Missed council tax payments will not become statute barred for 20 years in Scotland.
Income tax and VAT
Debt owed to HMRC relating to income tax or VAT has no time limit, so you can be pursued for this debt indefinitely if you’re a resident in Scotland – the same as in England and Wales.
Overpayments of Social Security Benefit
If you have received an overpayment of Social Security Benefits in Scotland, you can be chased to repay this debt for up to 20 years.
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Which debts can you be chased for after 10 years?
As you can see, there are plenty of debts that creditors will chase for much longer than 1o years.
- Any debts that become enforced with a CCJ or Decree
- Mortgage shortfalls or Mortgage Arrears
- Income tax and VAT
- Scottish Council Tax and some benefit overpayments
Since almost any lender can apply for a CCJ, this is a broad list.
When do these limitation periods begin?
Another thing to think about when considering how long it takes for debt to be ‘naturally’ written off is when the clock starts ticking.
The clock doesn’t start when you sign a credit agreement, it starts when you either last admitted to owing the debt or last made a payment towards what you owe. In Scotland, the time limit states from when the creditor last contacted you.
It’s also worth understanding that the clock can reset too.
We’ll take a more detailed look at how these factors work:
Your last payment date
As far as the law is concerned, a payment towards an agreement that you’ve signed is proof that the agreement is valid.
So, if you’re 2 years into paying of a 4-year personal loan then suddenly stop paying, the limitation period will pass on that day 6 years later.
Even if you don’t make a payment towards the debt for 5 and-a-half years, if you then make a small payment when you’re contacted, the time limit resets and the debt can be chased legally for another 6 years.
The last time you admitted owing the debt
If you admit to owing money to a creditor in writing (and sometimes electronically – like in emails or using online forms), this can be used as a legal confirmation that you owe the money.
This means that if you signed a letter confirming a repayment plan or similar, then the limitation period will begin from that date.
Again, this period will continue to rest. So if you go for 5 years managing to ignore efforts to collect the debt then admit that you owe it, the limitation period will run for another 6 years and your creditor will continue to try to collect the debt.
Is it a good idea to try to wait for your debts to become statute barred?
No one likes opening debt collection letters or getting phone calls from companies trying to recover money – so the idea of just ignoring everything and waiting out 6 or 10 years might sound appealing.
In reality though, it’s a tactic that very rarely works – and can lead to a very badly damaged credit report and an increased amount of money owed.
As creditors take action against you, this action will be recorded with credit referencing agencies and will reduce your chances of being approved for any kind of credit going forward. This can even include phone contracts, monthly insurance payments, and rental agreements.
What’s more, debt collection efforts come with a real financial cost. Even the early stages of debt collection often see missed payment charges or admin costs added to the amount you owe – and when debt collectors or bailiffs are involved, the costs can increasing into hundreds or even thousands of pounds.
In short, trying to wait out any limitation period isn’t a good plan.
Are you being chased for debts that are more than 10 years old?
So, as you can see by now, there are many debts that can be chased up to and beyond 10 years. In fact, if creditors have managed to get a CCJ or Decree ordering the repayment of the debt, virtually any debt can hang over your head for an unlimited amount of time.
As we’ve already said, trying to ignore what you owe in the hope it will go away is almost always going to lead to large financial costs and a badly damaged credit rating – which can make life extremely difficult.
It might not sound like something you want to do – but you can often stop legal action being taken by contacting creditors and trying to agree new repayment terms. Many companies will be glad to be in touch with you and receiving an affordable amount each month towards what you owe.
Of course, this isn’t always the case – some creditors will demand that a full payment is made – something which is impossible for a lot of people.
If you find yourself being chased for debts that are more than 10 years old, they’re unlikely to go away – so it can often be a good idea to explore formal debt solutions. Not only does a Government-approved debt solution mean that some of what you owe could be written off – it also means someone else will talk to your creditors on your behalf, stopping the calls and letters, and giving you some breathing space to get your finances back on track.