Statute barred debts (Scotland)

This fact sheet tells you about time limits for debts. These are important because if the time limit has passed, you may not have to pay the debt back. It is especially important that you understand time limits if you have old debts. This is so you don't do something that could start the time limit running again.

Use this fact sheet to:

• find out which time limits apply to which debts;
• find out when a time limit starts running on a debt;
• deal with creditors chasing you for old debts; and
• deal with court action for debts past their limit.

The sample letter mentioned in this fact sheet can be filled in on our website.

What is the Prescription and Limitation (Scotland) Act 1973?

The Prescription and Limitation (Scotland) Act 1973 sets out the rules on how long a creditor (a person, company or government body you owe money to) has to take certain action against you to recover a debt. From 28 February 2025, parts of the Act were updated by the Prescription (Scotland) Act 2018. The new rules do not have any effect on a debt if the creditor had run out of time before this date.

Limitation periods for debts are important, because if the creditor has run out of time, you may not have to pay the debt back.

The time limits do not apply to all types of recovery action. Also, the time limits are different depending on the type of debt you have.

• For certain debts, there is a 5-year limit in some circumstances.
• Most debts, including those covered by the 5-year limit, are also covered by a 20-year limit.
• Some types of debt are not covered by either of these rules and have a different time limit or do not have a time limit at all. These are rare.

The 5-year time limit

Some types of debt are covered by the 5-year limit. To decide whether this limit will apply, you need to think carefully about any action that either you or the creditor has taken over the last 5 years.

The 5 years is counted from the ‘appropriate date’. There can be different rules for what counts as the appropriate date depending on the type of debt that is owed.

You can argue that the debt is ‘extinguished’ (no longer exists) if since the appropriate date:

• the creditor has not started a court claim against you; and
• you or anyone else owing the money (on a debt in joint names) have not made a payment on the debt during the last 5 years; and
• you have not written to the creditor admitting you owe the debt during the last 5 years.

If the debt is extinguished, this means that it no longer exists and there is no debt owed to the creditor any more.

Debts covered by the 5-year limit include:

• unsecured credit debts, such as credit cards, personal loans, catalogues and overdrafts;
• contract debts, such as gas, electricity or telephone bills;
• rent; and
• benefits given to you by the Scottish Government.

The 5-year limit does not apply to the following types of debts:

• a decision or decree that has been made by a court;
• benefits given to you by the Department for Work and Pensions (DWP);
• Working Tax Credit, Child Tax Credit or Pension Credit;
• council tax or business rates; and
• child maintenance payments due under the Child Support Act 1991.

Your creditor can ask you to extend the time limit by 12 months. This may be because both you and the creditor want to take more time to negotiate. They can only ask you to do this once, and they cannot ask you to agree to this before the appropriate date has passed. You do not have to agree to this. If a creditor asks you to agree an extension, contact us for advice.

What should I do next?

If you are being asked to pay a debt that you think is extinguished, you can use the Time has run out to recover a debt sample letter to write to the creditor. This tells them about the Prescription and Limitation (Scotland) Act 1973 and disputes that you owe the debt. Keep a copy of any letters that you send.

If you have started to make payments on a debt after the 5-year limitation period has run out, your payments will not have restarted the time limit again. The debt is still ‘extinguished’ and legally no longer exists. You could even argue that the creditor should pay back the money you have paid because there was no debt to be paid off. Contact us for advice.

If the creditor has evidence

If the creditor can prove that you wrote to them admitting the debt, or you or anyone else owing the debt made a payment before the debt was extinguished, then the 5-year limitation period would start running from the date you last made contact or made a payment.

The 20-year limit

Most debts are covered by the 20-year limit. The 20-year period starts when a creditor can enforce the debt. Unlike the 5-year limit, the 20 years keeps running even if you make payments or acknowledge the debt in writing. The time does not start over again. Once the 20 years have passed, the debt does not have to be repaid because it no longer exists.

The 20-year limit does not usually apply to a debt if you are up to date with the payments agreed in a contract as the creditor does not have the right to enforce the agreement if you have kept to it.

If a creditor makes a court claim for the debt, for most debts the 20 years continues to run from the original date on which it became enforceable. However, the time limit can be extended to allow the court to decide the claim.

Rules for different types of debt

Unsecured credit debts

This includes credit cards, store cards, bank and building society personal loans, catalogues, finance company loans and overdrafts. You may have had a debt with an ordinary unsecured creditor that you have not heard about for a very long time. You may have moved address or thought that the debt had been written off. You need to think carefully about any action that either you or the creditor has taken over the last 5 years.

Most unsecured credit debts will be covered by the Consumer Credit Act 1974 (CCA 1974). The appropriate date for this kind of debt may be one of the following dates.

• If you have been asked to pay everything back because you missed a payment, the date on which a default notice was issued.
• If you had agreed to repay all of the debt by a specific date in the agreement, the date on which the final payment was due.
• If your agreement said the debt was payable on demand, the date on which the demand for payment was made.

If you are not sure what the appropriate date is for your agreement, contact us for advice.

The Financial Conduct Authority (FCA)

The Financial Conduct Authority (FCA) has published the Consumer Credit sourcebook (CONC) which looks at whether a debt is being collected fairly. Although the FCA cannot investigate individual complaints, you can still use their rules and guidance when disputing a debt on the grounds of limitation. All of the rules and guidance applies, no matter how old the debt is. In the Consumer Credit sourcebook (CONC), the FCA includes the following rules and guidance.

• "In Scotland, a statute barred debt ceases to exist and is no longer recoverable if: (1) a relevant claim on behalf of the lender or owner has not been made during the relevant limitation period; and (2) the debt has not been acknowledged by, or on behalf of, the customer during the relevant limitation period." 7.15.3 Guidance
• "It is misleading for a firm to suggest or state that a customer may be the subject of court action for the sum of the statute barred debt when the firm knows, or reasonably ought to know, that the relevant limitation period has expired." 7.15.7 Guidance
• "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." 7.15.8 Rule

You can make a complaint to your local trading standards department, who can look into your case. You can also complain to the FCA, as they can look into companies’ behaviour, even though they cannot deal with individual complaints. See the Useful contacts at the end of this fact sheet, or contact us for advice.

The Financial Ombudsman Service (FOS)

You may be able to complain to the Financial Ombudsman Service (FOS) about the way a company has dealt with your account. You must follow your lender’s complaints procedure first. You can only use the FOS to complain about events that happened from April 2007 onwards. See the Useful contacts at the end of this fact sheet, or contact us for advice.

Sheriff court decrees

The debt is likely to have been included in your credit reference file. A decree will stay on your credit file for 6 years. If the creditor has a decree, they will have 20 years to use diligence to recover the debt.

To find out more about diligence, see our Diligence fact sheet.

Overpayment of social security benefits

The 5-year limit applies to benefit overpayments that have been given to you by the Scottish Government. These include the Best Start Grant and the Carer’s Allowance Supplement.

The 5-year limit does not apply to benefits that you have been given by the Department for Work and Pensions (DWP), for example, Jobseeker's Allowance, Employment and Support Allowance, Income Support or Universal Credit. It does not apply to benefits you have been given by HM Revenue & Customs (HMRC) either; for example, Child Tax Credit or Working Tax Credit.

However, the 20-year limit does apply to benefits given to you by the DWP or HMRC, and it also applies to benefits given to you by the Scottish Government.

Council tax and business rates

Arrears of council tax or business rates can be recovered for up to 20 years. This time limit runs from the date of the final demand. If there was a ‘prolonged and unexplained delay’ in recovery, it may be possible to challenge any new recovery action. Contact us for advice about whether you might be able to use this kind of argument.

To find out more about dealing with council tax debts, see our Council tax arrears fact sheet.

For more information about dealing with business rate debts, see our Business rates fact sheet.

Income tax and VAT

Only the 20-year limit usually applies to income tax, VAT and National Insurance debts owed to HMRC.

See our Income tax debts fact sheet to find out more about dealing with tax debts.

Mortgage shortfalls

There are rules in place about how quickly a lender should contact you after sale of the property if they want to recover the shortfall. See our Mortgage shortfalls fact sheet.

There are different legal views about whether a lender has 5 or 20 years to take court action to recover a mortgage shortfall debt in Scotland. You may need specialist legal advice if:

• your lender is trying to recover a mortgage shortfall debt;
• you have not made any payments towards it recently; and
• you have not written to the lender about the shortfall recently.

Contact us for advice about how to find the right type of legal help.

Student loans

Student loan agreements are contract debts and this gives the company asking you to pay 5 years from the appropriate date, or the date you last paid or acknowledged the debt, to go to court to enforce the agreement. There are two sorts of student loans and different rules apply depending upon when you took out the loan.

Old-style student loans (from 1990 until September 1998)

Old-style ‘mortgage’ student loans are Consumer Credit Act agreements. Payments cannot be automatically deducted from your wages. Court action has to be taken before the debt can be enforced. This means that the time limits can apply if you have not paid or acknowledged the debt for over 5 years. The appropriate date for this kind of loan may be a default notice (see the earlier section Unsecured debts to find out more about default notices).

If you are being asked to pay an old style 'mortgage' student loan that you think is extinguished, you can use the Time has run out to recover a debt sample letter to write back to the creditor. This tells them about the Prescription and Limitation (Scotland) Act 1973 and disputes that you owe the debt. Keep a copy of any letter that you send.

New-style student loans (from September 1998)

From September 1998 new style or ‘income contingent’ student loans include rules to say that repayments will be automatically deducted directly from your wages, or through your tax return if you are self-employed. This means that the Student Loans Company (SLC) are usually allowed to take money from your wages as they take this money when you become liable to pay it, so this will normally be within 5 years of the appropriate date.

Useful contacts

Financial Conduct Authority (FCA) Regulator for financial services such as payday lenders, banks, credit companies, insurance companies and mortgage lenders. Phone: 0800 111 6768 or 0300 500 8082 www.fca.org.uk

Financial Ombudsman Service For complaints about banks and other creditors Phone: 0800 023 4567 www.financial-ombudsman.org.uk

Other fact sheets that may help you

Business rates fact sheet

Council tax arrears fact sheet

Diligence fact sheet

Income tax debts fact sheet

Mortgage shortfalls fact sheet