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The law states that credit card customers may eventually get a reprieve from old debts. When can a debtor finally breathe easy knowing that an old credit card account balance is no longer collectible?

It is a fact that debt collectors can be some of the most persistent companies out there. There is big money in collecting on old debts that might otherwise go unpaid. There is even an incentive to collect on old expired accounts. Yet debtors are protected from prolonged collection periods that might otherwise last for eternity.

What is the Time Limit?

Collectors have a five year window to take action against a non paying account holder. If no action has occurred after 5 years of default, the debt may be considered “extinguished” and no longer collectible. There are some criteria that must be met however.

• No previous payments may have been made within the past 5 years in order for the debt to expire. Making a single payment renews the 5 year clock where a collector may take action against a borrower.
• No acknowledgements of owing the debt may be made within the last 5 years. Any written correspondence where an admission is made of owing money to the creditor can extend the collection period.
• Creditors may not have already obtained a decree against the credit card account holder.

These protections are provided by The Prescription and Limitation (Scotland) Act 1973. Whenever an account is believed to have already been “extinguished” then a letter may be written to inform the creditor that they no longer may pursue collection. Making contact with a collector with a letter does not renew the account as long as the consumer avoids admitting or acknowledging that a balance is owed. The debt is considered permanently extinguished after this 5 year time limit for recovery.

According to the Financial Conduct Authority, “A firm must not continue to demand payment from a customer after the customer has stated that he will not be paying the debt because it is statute barred.” A written notice to an errant creditor can stop such collection efforts.

The purpose of the act is not to allow borrowers to skirt their financial responsibilities. Instead, it places an obligation on lenders to behave responsibly and to limit their dealings on bad debts to a reasonable timeframe.

It is possible that creditor has evidence that one of the triggers for extending the collection period has occurred. Upon request, a collector must provide any documentation of account history in accordance with the Data Protection Act 1998.

Anyone needed help with a time barred debt may obtain free advice from one of the national money advice agencies serving Scottish residents.