Staute Barred Debt

[Crocdoc]

I find it extremly interesting that the level of Staute Barred debt being pursued by collection agents appears to be on the increase, Numerous companies are still forwarding claims for payment despite the fact that new guidlines were published by the OFT in October 2011. The latest one to come to my attention is Cabot who appear to be outsourcing SB debt to CCS collections . There are of course many others including our very own Mackenzie Hall to name but a few. Furthermore, collated information suggests that these companies are adopting the rules that apply to Englnd and Wales with regard to sending demands even although court action cannot be instigated. They would appear not to have given consideration to the fact that the rules in Scotland vary considerably and that the debt ceases to exist after the 5 YEAR period has elapsed.

 

This in my opinion would suggest that there must be an element of success in adopting this practice and therefore more needs to be done to raise awareness.

 

What the OFT State

 

 

In Scotland, statute barred debts are governed by the Prescription and Limitation (Scotland) Act 1973. Unlike the situation in England, Wales and Northern Ireland, the debt itself ceases to exist (is 'extinguished') providing the following criteria have been met:

• a relevant claim from the creditor has not been made during the relevant limitation period (the limitation period in Scotland is 5 years), and

• the debt has not been acknowledged by, or on behalf of, the debtor in the relevant limitation period.

B.4 The Prescription and Limitation (Scotland) Act 1973 regulates the extinction of a right arising from the abandonment or long neglect to exercise or enforce that right. If a debt has subsisted for a continuous period of five years:

• without any 'relevant claim' having been made, and

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• without the subsistence of the debt having been 'relevantly acknowledged'

then, as from the expiry of the five years, the debt is extinguished.

B.5 The term extinguished differentiates the Scottish concept of 'prescription' from the English Limitations Act, as once an obligation has been extinguished it no longer exists as a legal right and is deemed to have been abandoned or satisfied.

B.6 A relevant claim will normally take the form of the creditor raising an action for payment in court. Simply sending a default notice or a letter demanding payment will not constitute a relevant claim.

B.7 A relevant acknowledgement will normally be made by performance of the debtor (or his representative). For example, by making payments or by making an unequivocal written admission clearly acknowledging that the obligation still subsists.

OFT664Rev

Dare I suggest that it is possible that the collection industry may have elected to ignore the appropriate legislation.

[IdaInFife]

unfortunately that is the key, awareness to many debtors are not aware it and get scared