What are the time limits for paying back debt?

If a debt is barred under statute, it means that the creditor has run out of time to use certain types of action to try and make you pay the debt. The Prescription and Limitation (Scotland) Act 1973 explains this.  

The time limits are 5 or 20 years, depending on the type of debt. They do not apply to all types of recovery action.  

If the creditor has run out of time, you may not have to pay the debt back. 

Unsecured credit debts

Unsecured credit debts are things like credit cards, store cards and personal loans. These debts are often called simple contract debts. 

You can argue that the debt no longer exists if all the following apply: 

• The creditor has not already obtained a decree (a court order for payment) or started court action against you. 
• You have not made a payment on the debt during the last five years. 
• You have not written to the creditor admitting you owe the debt during the last five years. 

Sheriff court decrees

If the creditor has been to court they usually have up to 20 years to start enforcing a court order for payment. 

Overpayment of social security benefits

The Department of Work and Pensions (DWP) will probably take court action to recover benefit overpayments. They can do this within 5 years or 20 years, depending on the circumstances. The rules for tax credits and social funds payments may also be different. This is a complicated area. Contact us for advice about finding the right type of legal help. 

Council tax

Council Tax arrears can be recovered for up to 20 years. This time limit runs from the date of the final demand, or from the last time you acknowledged the debt.

Income tax and VAT 

There is no time limit for recovery of income tax, VAT and any related interest.

Mortgage shortfalls

A mortgage shortfall can happen if your home is repossessed, and the sale did not raise enough money to pay off the mortgage. There are different legal views about whether a lender has  5 years or 20 years  to take court action about this.

Student loans

Student loan companies have 5 years to go to court about debt. This is from the date you last paid or acknowledged the debt.