Why Statute Barred doesn't let you run away from your debts

by StepChange Debt Charity on 04 February 2012  |  6 comments
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Statute Barred is a piece of legislation which some think allows you to run away from your debts. That's a dangerous myth!

We’ve all seen the adverts that promise to "get your debt written off” in some remarkably easy way. Usually these are fee-charging companies that are trying to get people to take out formal debt solutions such as individual voluntary arrangements or bankruptcy.

It’s true in both cases that some debt could be written off, but neither could be described as a free and easy ride.

So what’s the alternative? Can you just do a bunk to Iberia?

You probably know a bloke down the pub with a tan like a leather handbag who boasts that he did a midnight flit to Spain to escape his debts a few years ago and has come back with a magically clean credit report.

It’s not that easy, but there’s a piece of legislation called Statute Barred, part of the Limitation Act, that some try to use in these situations. This is the only real piece of debt law that could see your debt deemed unenforceable, after a period of six years.

Statute Barred

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

• They have not already obtained a county court judgment (CCJ);
• You or any one else owing the money (say on a debt in joint names) have not made a payment; or
• You have not written to the creditor admitting you owe the debt.

So, could you ignore the creditors and not pay them anything for six years?

Despite the debt myths that have grown up around Statute Barred and the Limitations Act that wouldn’t actually work.

As the above explanation suggests, if you start to ignore your creditors they’re liable to get in touch with you rather quickly. They may even do this through the courts by obtaining a County Court Judgment (CCJ) or other debt collection procedure available to them.

Could you move house and not tell them?

That wouldn’t work either as it’s your responsibility to keep your creditors updated with your current address. Moving house and not telling your creditors where you’ve gone is seen as debt avoidance. This is never recommended.

Running away to Spain

The Act isn’t there to encourage debt avoidance or non payment and most judges will take a dim view of this tactic. It’s there to protect people from being forced to pay debts that have ‘timed out’ through no fault of their own.

The money owed is not written off; it’s still a debt and in reality it still exists, but with the Act in force the creditor can no longer enforce the debt and take you to court.

The important thing to remember is that there are laws to protect you from being chased for very old debts that you weren’t aware of.

However, it’s vitally important to realise that these laws cannot be twisted to help you get away without paying your debts.

Your debts won’t disappear

We find our clients are genuine in wanting to do their best to repay as much as they can afford to their creditors. In turn we want to do our best to give you the correct advice and guide you through the maze of legislation while being impartial and honest at all times.

If you are desperate enough to start looking for ways to escape your unmanageable debt you might want to use on online debt help tool like the CCCS Debt Remedy to find a solution to your problem quickly.

We’re here to help the ‘can’t pays’ rather than the ‘won’t pays’. If you’re thinking of taking a six-year Spanish holiday to escape your debt nightmare think again; you might be eating paella a lot longer than you imagined.