The Limitation Act 1980 On Old Unpaid Debt In The United Kingdom

The Limitation Act 1980 On Old Unpaid Debt In The United Kingdom
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statute-barred-debtThe Limitation Act of 1980 is a statute of limitations passed by Parliament to prevent unfair and unreasonable attempts to collect debts years or decades after the initial debt was incurred. The intent behind this law was to prevent unscrupulous lenders from bringing punitive legal action against debtors. The Limitation Act of 1980 has implications for the protection of consumer credit as well as protection for claimants who have legitimately loaned money to debtors. The main thrust of the Limitation Act was to set standard timeframes outside which action could not legally be brought against a debtor.


The Limitation Act broadly covers just about any branch of law under which parties stand to lose land, money, or other items or considerations having real (i.e. monetary) value. Trusts, contracts, mortgages, and personal injury are all considered in the matrix of the Limitation Act. Generally, contracts between individuals have a statutory limit of six years in which to begin legal recovery proceedings from the day after the breach is or could have been reasonably discoverable. The Limitation Act also prescribes circumstances under which the statute of limitations may be extended or waived. It is interesting to note that the only offense under this body of law that does not have a limit on prosecution is fraudulent breach of trust.


For private contracts and agreements, the Limitation Act stipulates a time frame of six years from discover of breach. In the case of actions concerning land, mortgages, or banks, the law specifies a limit of twelve years. Personal injury claims have a limit of three years, and claims concerning defamation must be initiated within one year of the occurrence. These limitations are designed to afford claimants a reasonable timeframe in which to initiate collection procedures and/or litigation prior to judicial proceedings.

This means that if a party signs a mortgage to secure a property parcel and later loses their job or means of payment, the bank has up to twelve years from the default of the mortgage to initiate collection procedures. If the debtor pays on the mortgage prior to the twelve years’ limitation but no legal action has yet been taken (e.g. in November of 2012 the debtor began payment on a property they defaulted on in January of 2001) the statute of limitations begins fresh. The same holds true for claimant actions.

The statute of limitations provides protection of law against fraud and default. So long as the claimant initiates reclamatory action within the statutory time allotted, expiration of the statute of limitations is not a defence to the action. In the eyes of the law, this permits ample time for the claimant party to amass any necessary evidence and documentation of the contract and the breach thereof.

Why A Statute of Limitations Is Necessary

Unscrupulous lenders would frequently wait, sometimes for decades, until reading of a primary contract holder’s death in the Obituary section of the paper and then initiate legal recovery action. This resulted in innocent bystanders such as the bereaved wives and children of the deceased suddenly being confronted with not only their grief and the expenses of a funeral, but the defaulted amount of the loan or mortgage plus exorbitant interest payments. Such stories were quite commonplace in the United Kingdom from the 1700s to the mid-1900s, and the Limitation Act of 1980 was implemented to prevent such abuses.

This statute also made it a prosecutable offence to mislead debtors as to their obligations under the law. Implying or falsely stating that a debt is still legally recoverable after the statute of limitations has run out is not only an abuse of trust, but is also unfair business practice. There are lenders who do this routinely, but this assumes the debtor is not aware of their rights under the law. A reputable lender will always state clearly and concisely at the time a debt is incurred what the debtor’s rights and obligations are. If the debtor knows the statute of limitations has expired and advises a claimant that the collection is statute barred, the claimant could then be open to prosecution for harassment under section 40(1) of the Administration of Justice Act of 1970.

Available Options

A debtor may choose to pay on a defaulted debt after the statute of limitations has already run its course. In these circumstances, the debt should be allowed. A written record as evidence that payment has been received may alter the provisions of the Limitation Act, and consulting with a solicitor before paying on or receiving payment of a old statute-barred debt is always a wise decision.

The Limitation Act offers fair and unbiased protection to both debtors and creditors to ensure both sides uphold their legal obligations and that legitimately incurred debts are recovered in a reasonable span of time. Understanding the letter and governance of the Limitation Act is an important first step in safeguarding one’s credit against fraudulent or statute-barred debt.


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