For how many years can debt be collected?

How many years a debt can be collected for, after it has first been incurred, changes depending on the nature of the debt and where in the UK the debt is located. The rules of time limits of debt collecting are set out in the Limitation Act 1980.

If the debt is unsecured, a creditor has up to six years to chase payments.

Once the six years has elapsed, the debt becomes known as statute barred debt, which means it is not enforceable after this period. However, this does NOT mean the debt has been written off.

The creditor can still chase payment for a statute barred debt as long as they have been in regular contact within the time frame set out by the Limitation Act 1980. If the debtor changes addresses without telling the creditor or does not open the letters, this will still be counted as regular contact. If there has been no attempt to contact the debtor within the time limit then the creditor cannot legally chase the debt.

To extend the limitation you will need to do the following:

  1. Keep in regular contact with all customers
  2. Keep a full record of all calls and follow up every call in writing. Summarise what was discussed either in an email or letter as the acknowledgment of the debt has to be in writing by either party
  3. Enter into instalment plans no matter how small - an instalment re sets the limitation time running from the date of the last payment

Most importantly keep a track of limitation as part of your credit control process and ensure that the date is diarised. Don't miss out on recoveries simply by leaving debts unpaid for too long. Send it across to Forbes Collect, the sooner you send it across the better chances of recovery.

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06 Dec 2017

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