You cannot afford to repay your debts. Or you don’t want to repay the debts. Or, you made part payment of the debt but defaulted midway. Either way, you now have obligations waiting to be paid even after 7 years. So, what should you do about unpaid debts after 7 years? What happens to 7 years of outstanding debts? This is what we will learn about here.
If you want to do something about the 7 years old unpaid debts, like settle them or otherwise, do seek proper debt advice from experts before taking any action.
Suppose you are in UK. If so, then not paying debts of 7 years would have made your debt statute-barred. That is to say, depending on the debt, it will become uncollectible or unenforceable through legal means after the passing of 5 or 6 years. Find more about statute-barred debts through StepChange debt advice.
Let’s say; in the 6 years, the creditor did not pursue you even once for debt recovery. In that case, that particular debt has legally passed the statute of limitations. While the obligation still exists, and the creditors could ask you to repay the debt through other means, those debts are officially unenforceable now. You do not have legal obligations to repay them, but you can if you can afford it.
For a debt to validate the statute of limitations, a few conditions should be considered:
- You did not make a single payment towards the debt during the 6 years since its initiation.
- A written acknowledgment of the debt does not exist in the 6 years.
- If you defaulted in making payments, the creditors did not take you to court for 6 years for debt recovery.
For a statute-barred debt, these conditions must be valid. If not, the debt cannot be statute-barred. Then, even after 7 years of not paying the debts, you might have to offer them payments if the creditors approach you again for debt repayment. Or, you can seek Stepchange number for debt help.
7 years of unpaid debt!
I am frequently asked what happens to debt after 7 years. It’s a common misconception that your debt becomes unenforceable after seven years because that’s how long it takes for certain negative credit items to disappear from your credit report in other major countries like the United States and Canada.
However, in the United Kingdom, a debt becomes unenforceable after only six years.
If a creditor waits too long to pursue you for a debt, it becomes statute-barred or unenforceable. The ‘limitation period,’ also known as the statute of limitations, is six years.
Remember that in order for a limitation period to be valid, the following conditions must be met:
- In the last six years, you have not made a written acknowledgement of your debt.
- You haven’t made a single payment on your debt in 6 years.
- For six years after the date you defaulted, the creditor has not taken legal action against you.
Keep in mind that in order for your debt to be statute-barred, all of these conditions must be met.
Your limitation period will not be complete if any of these conditions are not met. The limitation period will restart for the first two conditions, and your limitation period will be irrelevant for the third. This is why:
If your creditor has contacted you about your debt but you have not acknowledged it or made any payments toward it, your account will eventually default.
While most of the debts pass their statute of limitations after 6 years, 7 years of not paying debts also have the same effects. 7 years of not paying debts can lead your credit profile to have many negative items. Such negative items may include charge-off accounts, late payments, bankruptcy Chapter 13, and debt collections. Other negative items can remain on your crest profile even after 7 years, such as bankruptcy chapter 7, judgments, and unpaid tax liens. Contact StepChange for debt advice to know more about negative items due to outstanding debt.
After 7 years of not paying your debts, most of the negative items on your credit report will fall off automatically. But in a sense, the debt does not get notably eliminated even after 7 years of non-payment. Even if those debt gets removed from your credit file, you still realistically owe to your creditors. The creditors, debt collectors, lenders can be permitted to use proper measures for debt recovery from you. Know what the creditors can do to you after 7 years of not paying debts on IVAonline debt help.
If the limitation period has passed for a debt, the creditors cannot enforce legal means to collect the debt from you. But if the statute of limitations is higher than 7 years mark, the creditors are liable to sue you for not paying off debt for 7 years. Given the court’s permission, they can send you legal letters, contact you personally, or can garnish your wages or salary. If you don’t know how to respond to the creditors after 7 years, get reliable debt advice and debt help.
Possible effects of not paying debts for 7 years
● Impact on the credit report
Not paying your debts for a long time will negatively affect your credit score. Hence, even though you still have obligations after 7 years of not paying the debts, removing the negative items from your credit report is beneficial. Keeping the negative items on your credit report for a long could permanently damage your credit score. So, if you want to improve your credit profile and manage your finances better, get trustworthy debt advice.
Only the negative items on your credit report will be automatically removed after 7 years of non-payment of debts. Positive information will remain indefinitely on your credit profile. Falling off of negative items from the credit report enables you to get new credit opportunities.
● Impact on credit rating
When the debts are not attended to or repaid for 7 long years, negative items like charge-offs and late payments appear on the credit report. This item has severe impacts on the credit score. The limit of this effect is dependent on your overall credit history of yours. One late payments entry could drop your credit rating by 80 to 100 points. Thus, it would be helpful to get debt advice from professional debt advisors.
● Possible lawsuit
Each state and debt has a separate timeframe as its statute of limitations. Until the passing of the statute of limitations, the creditors have the right to enforce legal actions on you for not paying debts for over 7 years. In such a case, the statute of limitation of a debt is not valid. If you lose the lawsuit, its judgment will remain on your credit profile for 7 years. As a result, you are bound to make payments for the debts. The creditors or debt collectors can then seize your assets for sale and garnish your salary/wage. Also, debt interest will continue until the debt is repaid in full, depending on the state of debt.
If it turns out that you intentionally did not make debt repayments with your good financial condition, you might get jail time as punishment for not paying debts for 7 years. Therefore, it is always advantageous to repay debts when possible. Getting proper debt advice and debt help significantly is helpful to deal with statute-barred debt after 7 years.
Things can be done if the creditor start court action after the limitation period has passed
If a creditor files a lawsuit after the statute of limitations has expired, the fact that the debt has become statute-barred or prescribed gives you a defence. If you can demonstrate that the limitation period has expired, the court should dismiss the creditor’s case.
If you receive court paperwork for a statute-barred or prescribed debt, it is critical that you complete and return the forms on time. If you don’t, the court will be unaware that the limitation period has expired and you will receive a court order.
This could be a CCJ, liability order, decree, or money judgement, depending on where you live and the type of debt. You may be able to get this cancelled later, but it will be difficult, and you may have to go to court.
Filling out court forms for a statute barred or prescribed debt can be more complicated than usual, and you may be required to attend a hearing if the court requires more information. If this occurs, you can considering contact us for assistance.
The onus is on the creditor to provide evidence that the limitation period hasn’t passed once you’ve returned the forms to the court explaining that it has.
If the creditor can show that the limitation period hasn’t expired, you’ll get a court judgement and have to pay the debt. This evidence could include payment receipts or copies of letters you’ve sent.
If the creditor is unable to demonstrate that the limitation period has not expired, the court should dismiss their claim. You will not receive a court order for payment.
What should I do if my debt has passed the statute of limitations or has been prescribed?
What you do next is determined by how certain you are that the limitation period has ended.
If you are certain that the limitation period has expired,
If you haven’t heard from the creditor, there’s nothing you can do.
If the creditor contacts you and the debt is unquestionably statute-barred or prescribed, you should write to inform them that you will not be making any further payments. Request that they stop contacting you about the debt, or that they send you evidence if they believe the debt is still owed.
If you are unsure whether or not the limitation has expired,
It’s not always clear when the last payment or written acknowledgement of a debt occurred. It may be difficult to recall specific dates from five or six years ago.
You can check your debt payments by obtaining a copy of your credit report or going through old bank statements. Consider whether there are any memorable life events that are related to the most recent payment or contact you had with the creditor. For example, did you stop paying a debt after moving or splitting up with a partner?
If you’re still unsure, you have two options:
Contact the creditor and inform them that you believe the debt is statute-barred or prescribed, and request proof if they disagree. If the creditor responds with proof of payment or written acknowledgement of the debt, you must begin making payments.
Don’t contact the creditor and hope that the statute of limitations runs out before they file a lawsuit. We do not advise you to take this route. If a creditor hasn’t heard from you or received payment from you in a long time, they may file a lawsuit just before the limitation period expires. Ignoring a debt increases the likelihood that you will receive a CCJ, decree, or money judgement.
If the limitation period has passed but you still wish to pay the debt, you may do so. However, if you have other debts to pay that are not statute-barred or prescribed, you should consider whether your money would be better spent on these instead.
Wrap up
To summarise, if the debt’s statute of limitations has not expired, you should settle those debts before creditors take legal action against you for non-payment of debt for 7 years. Seek necessary debt advice if you do not want to restart the limitation period on your debts. Offering a debt repayment plan may also help to persuade creditors. Going for the best debt advisory service is the best option you can make. It is obvious that when people do not seek the right advisor, they end up in a situation where they are trapped in a negative credit report as well as a credit rating, which leads to possible lawsuits against you.
