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What is The Limitation Act ?

The Limitation Act of 1980 provides a ruling on the length of time that a creditor has to take action against you. However, the time limit that they have will depend upon the type of debt in question.

Unsecured credit debts

This type of debt includes credit or store cards, catalogues and bank personal loans. Even if you have not heard from your creditor for a while concerning your debt, it will still exist and your creditors are still within their rights to chase this debt indefinitely. It is worth noting that they can only use the legal system to do so for up to 6 years after you made the last payment.

Should you receive a letter from the creditor or a debt collection company after a specific time, requesting payment then in some cases you can say that they are too late and they may not be able to take action against you. However this only applies if the creditor has not obtained a CCJ against you and you have not made a payment or admitted the debt during the last six years.

In this case you would write a letter to the creditor explaining the Limitation Act and disputing the debt in question. You may also request to see evidence of the file they have regarding this. Please note that if they have proof that you have admitted to the debt or made a repayment then the six years limitation will start from this date.

County Court Judgments (CCJ’s)
Should your creditor have a CCJ outstanding on you then you cannot use the Limitation Act as the CCJ will still exist. The creditor may however need the Court's permission if the CCJ is over six years old. If the CCJ is made against you once the debt is out of the six year limitation period, then you can ask the court to set aside or remove this.

Council Tax
The council should not go to the Court if six years have passed since the Tax was due. Council tax is due when the council send a demand notice to you, make sure that you check when this was sent as this will help determine when the 6 year limitation period begins. In the case of mortgage shortfalls the lender will have 12 years to pursue the debt. You can be pursued for tax and VAT payments for as long as necessary, there is no time limitation.

Benefit Overpayments & Social Fund Loans
This type of debt can be pursued by the Department of Work & Pensions for up to 6 years from the date the overpayment or social fund loan was due. You should be aware that they can make deductions from your benefit even if the debt is over 6 years old. Debts can include overpayments of income support, job seekers allowance, housing benefit, council tax benefit and repaying a social fund loan.

Student loans
The Student Loans Company will have 6 years from the date you last made a payment or agreed the debt to go to Court. With the older style student loans they will have to go to Court before they can enforce the debt against you. In this case the Limitations Act can apply. Those who obtained a newer style loan from September 1998 have their repayments deducted directly from their wages or by other means if they are self employed. Therefore the student loans company can take money from your wages for a loan over 6 years old without going to Court.