Liability for Debts and the Limitation Act

[BarleySugar]

I was watching Watchdog, and heard that if a loan company etc fails to follow up a debt for 6 years, then the borrower is no longer liable. I know someone this might apply to, so I will get them to check it out tomorrow. I thought if you borrowed money, you owed until you paid, took out an IVA, or went bankrupt.

This link sets it out in more detail, it's not quite as simple as above, in case it's of use to any grapes or people you know.
Debt Factsheets - Liability for Debts and the Limitation Act

[pigletwillie]

You will still owe it, and it can still flag up on your credit checks, they just cannot pester you for it after 6 years without either them or you communicating. One letter or call blows it up in your face.

[BarleySugar]

Apparently a default on a debt stays on record for 6 years, so yes, you do still owe it technically and morally, but if they can't collect and it's not on your record, it doesn't seem to make a lot of difference.
My friend's OH has some very old debts (over 10 years), which is why I've been looking at this. Not that he should 'get away with it', but for her peace of mind, I'll pass the info on, and let them decide what to do, probably a visit to CAB would be best.
I know he's had letters recently that he's binned with no acknowledgement, and she's been having kittens about it all blowing up in their faces.

[madmax]

If there has been no demand for funds owing for 6 years since your last payment then the debt is known as Statue Barred. This means that while you technically still owe the cash, the vultures cannot demand or take you to court for it.

However, when you get a demand for funds owed, most debt collection companies 'pass the parcel' with the debt. Sometimes they just write it off. They cannot by law use intimidation to recover funds (id esse - external indication of endebtedness on the outside of the envelope, harrassing phone calls et al). Also in any communication, NEVER admit liability or make any statement that can be assessed as an admission of owing the money.

Also if you recieve a summons, defend it within 14 days or request an extension. This delays things and it gives you time to prepare. Most times when debt collection agancies take you to court they very rarely turn up, so should you defend your case then the case will be dismissed in your favour and the debt will be struck off. Doesn't happen all the time though!

I personally have no issue about banks losing cash - purely because the shareholders have made obscene profits in years gone by. Individuals however I will always pay back.

My motto is, "Let sleeping dogs lie". If you are not chased, then leave well alone. Especially if your last payment was more than 6 years ago. If no action has been taken in those 6 years then chances are you will have a 'lucky escape'.

Sometimes raising a credit check can reflag debts.