Debts over six years old

[annpow]

Hi all,

I've just been reading the info about debts over six years old.

I'm just wondering when the 6 years would start from? I assume it wouldn't be the date that the agreement started? Is it from the date of default and how do I find out if 6 years have passed?

Thanks

[patdavies]

The six years starts from the time that the debt was last acknowledged (usually by payment of part of it), but also by simply agreeing that you owe the debt.

[IdaInFife]

Only from an actual payment being received.

Have a browse around the debt forum.

Have you received threatening demands for debts older than 6 years?


Ida x

[patdavies]

Originally Posted by IdaInFife

Only from an actual payment being received.

No, it's from last acknowledgement of the debt.

e.g. if you write and agree that you owe it, then the 6 year clock resets regardless of payments.

[sequenci]

Originally Posted by patdavies

No, it's from last acknowledgement of the debt.

e.g. if you write and agree that you owe it, then the 6 year clock resets regardless of payments.

No, this is wrong.

The Limitation period can be reset either via written acknowledgment or a payment.

Also remember that most limitation periods run from the date that the cause of action accrues. This means for some agreements the time would start at the earliest point where the account could have defaulted.

[patdavies]

Originally Posted by sequenci

No, this is wrong.

????

The Limitation period can be reset either via written acknowledgment or a payment.

I thought that was what I just said in response to IdainFife stating it was only a payment that reset the limitation period.

[sequenci]

Originally Posted by patdavies

????

I thought that was what I just said in response to IdainFife stating it was only a payment that reset the limitation period.

Hey Pat! I mis-read your post. I'm really Sorry! My interpretation was that it was implied that payments didn't reset the period which of course they do!

I'm multi-tasking and obviously terrible at it.

Please accept my apologies!

[patdavies]

No probs.

[sillygirl1]

The Limitation cannot continually be reset, I can't remember who knows the exact law on this but DCAs frequently tell you that 'this debt will NOT go away' when this law is in place to help it along.

I'm no expert though on the subject.

[sequenci]

Originally Posted by sillygirl1

The Limitation cannot continually be reset

It could. Providing the debtor continually acknowledges the debt in writing or makes a payment within 6 years each time. As an example if they made a £1 payment every 5 years the debt could run and run for ever. Of course the onus would be on the creditor to prove the payments were made!

[annpow]

So if I was to ignore letters, relating to the debt, regardless of who they are from. It would be six years from when I last made a payment or spoke/wrote to the company?

[Aequitas]

In a simple case:

1. The six years starts running when payment is due. Thus, if you agree to repay a loan in ten years time the six years does not start running until the ten years is up.

2. Once the six year period starts any acknowledegement or part payment starts the clock running again and this can happen repeatedly.

3. If the six year period has expired, an acknowledgement or part payment does not revive the right of the creditor to take action.

[rory32]

1. The six years starts running when payment is due. Thus, if you agree to repay a loan in ten years time the six years does not start running until the ten years is up.

The Court of Appeal stated that the cause of action arises once there is a failure to make the payments due. Not quite the same thing at all.

[Aequitas]

Originally Posted by rory32

The Court of Appeal stated that the cause of action arises once there is a failure to make the payments due. Not quite the same thing at all.

Not sure I understand the point you are making. Can you explain please?

[rory32]

You are stating the cause of action would run from when the ten years is up it appears (the end of the loan). The Court of Appeal stated that the cause of action was from the breach. So from when payments stopped.

Or do you mean if I agreed to start repaying a loan in ten years time?

[Aequitas]

I am still puzzled. If the agreement provides for payment on a specified date and you do not make it, are you not in breach?

[sequenci]

Originally Posted by Aequitas

I am still puzzled. If the agreement provides for payment on a specified date and you do not make it, are you not in breach?

Indeed you are but the terms of the contract may mean that action cannot be brought at that stage. The terms may state that there has to be a couple of missed payments before the action can be brought, this is certainly usually the case in regulated agreements.

I hope this makes sense?!?

[annpow]

We were discussing this at work today and I was tryinng to explain it to one of the other girls, who told me the following:

She had a current account with Barclays. Back in 2003 she was made redundant and stopped using the account. She says that it is in debt with no overdraft. About two years ago, when reclaiming bank charges arose she wrote to the bank (using a copy of the letter from CAG) about the previous charges accrued on the account.

Would this letter about bank chargesbe seen as an aknowlegement of the debt? She never took the matter any further, the bank sent her copies of her statements but she didn't follow it up.

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[sequenci]

Annpow,

It's very difficult to answer the question as what amounts to 'acknowledgement' would be down to interpretation and certainly very dependant on how the letter was written. If the request for info seemed to admit liability it could have started the clock ticking. This one may go down to a court's interpretation.

[Aequitas]

Originally Posted by sequenci

Indeed you are but the terms of the contract may mean that action cannot be brought at that stage. The terms may state that there has to be a couple of missed payments before the action can be brought, this is certainly usually the case in regulated agreements.

I hope this makes sense?!?

I can see we have been talking at cross-purposes. I had in mind a simple agreement to repay the whole of a loan on a fixed date. I concede this is not the type of arrangement likely to feature in this forum very often.

I simply wanted to correct two common misconceptions. The first is that time always starts running as soon as the loan/contract is made. The second is that, so long as you do not make a part payment or ackowledgement, money is never payable when six years have elapsed from the date the loan/contract is made.

So, if you have a contract for the supply of goods that requires payment six months after delivery, the clock starts to run when payment is due. And, if you issue a promissory note payable in ten years' time, you cannot get out of payment simply by not making any acknowledgment or part payment within six years of signing the note.