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When do debts die?

It is, in terms of legislation, quite an interesting act to read, not very long but seems to have covered most eventualities on tort, slander, libel, theft, claims on land, deceased estates, negligence etc but the purpose of this little blog is to highlight the time limits on the main claims that most people either make or have served on them. 

Under the Limitation Act, time starts to run from the ’cause of action’ which is normally when the creditor is entitled to be paid in full.  The Act provides specific time limits for when claims can be brought and if the debt is barred under statute, this does not mean the debt does not exist but that it becomes unenforceable.

Simple Contracts (invoices, credit cards, loans etc)

  • A claim cannot be made for money due to you after the expiration of 6 years.
  • Likewise, any claim you have made against someone but remains unpaid despite all attempts cannot be enforced after 6 years.

Actions to recover money secured by a mortgage

  • A claim cannot be brought to recover any principal sum of money secured by a mortgage or other charge on property after the expiration of twelve years from the date on which the right to receive the money accrued.

Time limit for actions to enforce judgments

  • No action shall be brought upon any judgment after the expiration of six years from the date on which the judgment became enforceable.
  • No arrears of interest in respect of any judgment debt shall be recovered after the expiration of six years from the date on which the interest became due.

However, enforcement proceedings of the English High Court are not subject to any limitation period and remain enforceable without a time limit.

Fresh accrual of action on acknowledgment or part payment

  • The time limit starts to run again if the person liable or accountable for the claim acknowledges the claim or makes any payment in respect of it
  • A current period of limitation may be repeatedly extended under this section by further acknowledgments or payments, but a right of action, once barred by this Act, shall not be revived by any subsequent acknowledgment or payment.
  • To be effective for the purposes of the Act, an acknowledgment must be in writing and signed by the person making it.

Bankruptcy and winding-up proceedings

  • In Ridgeway Motors (Isleworth) Ltd v ALTS Ltd [2005] EWCA Civ 92, it was held that the six-year limitation period did not apply to bankruptcy or winding-up proceedings based on judgment debts.

The above is just the outline of the Act and there are a lot of subsections on when knowledge of a claim arose (negligence, personal injury etc) and time limits can also be extended if the Court agrees.

Please also note that the blog does not constitute legal advice on the subject.  

If you have any questions about the insolvency process, please call our Business Rescue Service now on 0800 118 2948

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