If you look around on the internet for debt advice you might see one questionable tip popping up from time to time: ‘don’t pay off your debts, wait six years for it to become statute barred and you’ll be home scot-free.’ If this sounds too good to be true, that’s because it is, and if you think it’ll be without consequence you could be in for a nasty surprise.

What does statute barred mean?

When a debt has become Statute Barred, it means a sufficient amount of time has passed that it can no longer be enforced through the courts. It doesn't mean the debt has been written off however, and the creditor can still legally pursue you for the debt through other means, such as a collections agency.

A debt will be deemed statute barred after a set period of time (defined by the type of debt, most commonly six years) if the following takes place:

• The creditor has not already taken court action
• No payments have been made in relation to the debt within the set time period
• No acknowledgement has been made by the borrower to the lender that they owe them money within the set time period

If any of these events were to occur, the time before the debt becomes statute barred is reset. A lender can still continue to pursue an outstanding balance once a debt is considered statute barred, but not through the courts. This is in accordance with the Limitation Act 1980 which provides timescales within which certain actions may be taken to recover outstanding sums.

Are debts really written off after six years?

After six years have passed, your debt may be declared statute barred - this means that the debt still very much exists but a CCJ cannot be issued to retrieve the amount owed and the lender cannot go through the courts to chase you for the debt. That is not to say that lenders cannot use other means of retrieving what you owe, with debt collectors often proving a viable option.

Statute barred status does not apply for every type of debt, and some forms may require a longer waiting period before statute barred can come into effect, so hoping that a debt will become invalid after six years have passed might lead to further issues later.

The length of time before a debt becomes statute barred will depend on the type of debt; the six-year period set out by the Limitation Act refers mostly to unsecured debts such as a personal loan. Outstanding mortgage payments have a 12-year recovery period but tax, duty or related interest payments do not have a time limit for recovery. That means the debt can never become statute barred and a court judgment could be issued at any time.

As mentioned previously, the ‘start point’ of the six-year period is determined by the time you last made a payment towards the debt or acknowledged to the creditors that you owe an outstanding debt. That means it’s not a straightforward six years since the missed payment, if you have recently been in touch with the lenders to find out how much time remains until the debt is statute barred, that could be enough to start the clock again.

Additionally, at any time before a default is due to expire a lender may be able to issue a CCJ in an attempt to recover payments. CCJ markers last on your Credit Report for another six years, turning that initial six year wait into 12 years before your Credit Report no longer has any trace of your outstanding debt.

How does it affect my Credit Report?

A statute barred status will not appear on your Credit Report, but any negative markers reported by the lender will feature. Late payments and arrears, for example, last for six years from date of account closure, while defaults last for six years from date of default.

If your debt remains unpaid, your debt may be passed on to a debt collection agency who will need to access your Credit Report to verify your whereabouts. When your Credit Report is checked by debt collectors, a search footprint will be recorded to show the debt collectors' access of your data. These are different to the ones left behind when you or a lender checks your report and they show lenders that a debt collection agency has been involved in recovering a past debt. This can make it very difficult to get accepted for any kind of loan or finance for the two years that the footprint remains on your Credit Report.

See how court records appear on your Credit Report

Does a debt die with you?

If a debtor were to pass away, any outstanding debts are paid using their estate, which comprises of any property and money that they leave behind. When someone dies their estate is handled by the executors and any outstanding sums are settled before the remaining funds are distributed to the beneficiaries. Debts are only settled if they are joint credit agreements or are in the sole name of the deceased person. You don’t become automatically responsible for your husband’s, wife’s or civil partner’s debts.

How can I see how much is left on my debt?

All debts and loans, whether satisfied or ongoing are shown on your checkmyfile Credit Report until the end of the six years that they are reported. By clicking on the loan in question you’ll be able to see more information, including when the debt will expire and how long it will be recorded.

If you’re looking to see what debts are still present on your Credit Report, you can try checkmyfile free for 30 days, then for just £14.99 a month, which you can cancel online at any time. You'll get complete access to the UK's most detailed Credit Report, along with the support of our professionally qualified Credit Analysts.

Updated on 9 September 2021 by Sam Griffin