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Collecting debts: how long do you have?

09 March 2019 Written by Yuill & Kyle Solicitors Category: Blog

How long can I continue to chase what I am owed? Is there a legal time limit that will prevent me from pursuing unpaid invoices? These are common questions that debtors have regarding monies owed to them that we aim to explore in this blog.

How long?

A debt that can no longer be collected by a creditor, because a time limit has passed, is known as a statute barred debt. The time limit is set out in The Prescriptions and Limitation (Scotland) Act 1973. For unsecured debts, the timescale in Scotland is five years, compared to six years in England and Wales.

Once statute barred, a creditor cannot chase, harass or otherwise contact the debtor to recover the debt. The debtor cannot be pursued through the courts as the debt is effectively regarded as having been abandoned. A creditor can be challenged if they try to collect the debt when they should be aware that the debt is statute barred.

In order for the 5-year limitation to apply several conditions must be met. These conditions are that:

  • The debt has not been acknowledged by the debtor
  • No repayments have been made
  • There has been no contact from the creditor with the debtor regarding the amount owed
  • There are no decrees on the debt.

For other types of debt differing timescales apply. Indeed, for income tax and VAT there is no time limit. For Council Tax the limit is 20 years. With mortgages it depends whether it is capital arrears, in which case the time limit is 20 years, or arrears of interest, where a 5-year time limitation applies.

Considerations Before Action

If considering pursuing unpaid debts, there some factors to consider.

Clearly, given the statute barring legislation, it is important to establish how long the debt has been due. In most cases, this needs to be less than 5 years ago if you are to still to be able to try and reclaim the money owed.

It is very important to assess the current financial position of the debtor to understand whether the debt is worthwhile pursuing. It is possible that their position has changed, and the debtor is now in a position to pay the debt. Previously, it may have been the case that a business had been suffering from cash flow problems or unpaid debts of their own, but the position has now improved. Do not be too hasty in writing off a debt as irretrievably “bad”. It is possible to make appropriate enquiries to see if the debt can now be repaid. On the other hand, the status of the debtor may reveal that it is not worth the cost of pursuing what is owed.

Contact Our Debt Recovery Lawyers

Consulting experts in the field of debt recovery can result in a better outcome. Acting professionally and ethically, we at Yuill + Kyle can help you collect what you are owed while preserving the relationship with the client, where that is important to you. Contact us today on 0141 331 2332 or complete our online contact form.

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