Old Debts that are Statute Barred

There is a lot of legislation that governs the financial industry at the present moment, most of which is designed to protect consumers from financial institutions and creditors that become a little exuberant when trying to collect. If these laws were not in place then the stress that you feel now would undoubtedly be far higher, but did you know that some of them could actually make some of your debts outdated? Old debts that are statute barred could be completely unenforceable so it is worth checking exactly whether or not you have to pay them.
First of all, you need to know a bit more about old debts that are statute barred, such as the definition of statute barred debt. Old debts that are statute barred are determined by the Limitations Act 1980 and basically become unenforceable in court. As with any other form of legislation relating to the financial industry though, there are specific criteria that old debts have to adhere to if they are to be considered statute barred and only a small percentage of debts fall into the category as a result.
In order to be statute barred, debts must firstly be unpaid for more than six years. Secondly, your creditor must not have taken action to recover the debt through the courts so you must not have any court judgements against you as a result of it. Finally, you must not have acknowledged the debt in the period of six years in written form.
As you can see, it takes six years for time to run out on old debts that are statute barred. This is a long time and most debts never reach this stage as a result. However, if you think that you have debts that fit into this category then it is certainly worth investigating because creditors will not be able to pursue you through court if no action has been taken on the debt during that period of time. This applies to many forms of debt, most of which are unsecured. For example, credit cards, loans, store cards, catalogue debts, finance company agreements and other similar forms of debt can become old debts that are statute barred.
So what if you do have old debts that are statute barred? What can you do to make sure that they are written off? Well, there are three steps that you should take to make sure that you qualify as having old debts that are statute barred and a few tips to take note of too. First of all, you should request copies of your credit report from Experian, Equifax and TransUnion, the three major credit reference agencies. Check your reports to make sure that you have no court judgements against you for the debt. If you do not have any then the next step is requesting the information the creditor has about you. Thanks to the 1988 Data Protection Act, you can have a copy of the full file and you creditor is required to provide you with it by law. Go through it to make sure that there have been no payments or acknowledgements from you about the debt.
Finally, if it turns out that old debts are statute barred, there are template letters available online for you to send to your creditor informing them that the debt is now statute barred and that they can no longer pursue you for it. However, you must never, ever acknowledge the debt as yours in any way. As such, you should always keep copies of any letters you send to the creditor and make sure that you clearly state within them that you do not acknowledge the debt in any way. Failing to do so could actually be interpreted as acknowledgement in itself, thus defeating the purpose of declaring old debts that are statute barred. Always double check your wording and you will find that your letters have a much greater impact on getting creditors to leave you alone.

Andy Gorton is the author and editor of the Bankruptcy Clinic

Andy Gorton – who has written posts on Bankruptcy Clinic Blog.

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