# Statute of limitations on debt and likelihood of bank not chasing you



## Bronte (10 Jan 2013)

If a bank agrees to allow you to sell your home for less than the mortgage and they do nothing about the NE, just leave it lie, with no agreement or correspondance. On what grounds can they come back later. 

Specifically can they resurrect it after 5 years and 11 months (by sending you a letter for example) or do they have to issue proceedings.

Is the letter sufficient if not acknowledged.


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## tvman (10 Jan 2013)

Couldn't they sue you under the terms of the original loan?


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## 44brendan (10 Jan 2013)

Standard statute of limitations is 6 years. Where Land is concerned this increases to 12 years. However if PDH is sold, the standard statue limit would apply. i.e. the Bank would have 6 years within which to commence legal proceedings, from date of last debt acknowledgement. Sending a letter is not sufficient


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## Time (10 Jan 2013)

They can send 1000 letters if they want but that does not constitute an acknowledgement of a debt.

The debt is acknowledged by making a payment or admitting the debt is owed. They would have to issue proceedings within 6 years of the last payment or acknowledgement of the debt.


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## Bronte (11 Jan 2013)

So let's be clear. If before the 6 years you don't acknnowledge the debt by paying something off, the loan is dead. But if you pay something back or reply to them in writing acknowledging that you owe the money say at year 5 and 11 months this means the time (statute of limitations) starts again. And then the bank have another 6 years in which to issue proceedings.


If the loan cannot be pursued after 6 years, how does it work in practice, does it automatically get taken off your ICB record etc?

Does anyone recall what happened in the UK 20 or so years ago when people sent back the keys. I have a memory that the banks did nothing and waited for the stuatute of limitations to be nearly up and they then want after any debtors who had done well (bought a new home or got a good job)


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## Time (11 Jan 2013)

> So let's be clear. If before the 6 years you don't acknowledge the debt by paying something off, the loan is dead. But if you pay something back or reply to them in writing acknowledging that you owe the money say at year 5 and 11 months this means the time (statute of limitations) starts again. And then the bank have another 6 years in which to issue proceedings.



Spot on. 



> If the loan cannot be pursued after 6 years, how does it work in practice, does it automatically get taken off your ICB record etc?



They can try and proceed after 6 years but you then have to raise a statute barred defence. You could accidently acknowledge the debt after the 6 years and it would restart the clock and give a statute barred debt a new lease of life. 



> Does anyone recall what happened in the UK 20 or so years ago when people sent back the keys. I have a memory that the banks did nothing and waited for the stuatute of limitations to be nearly up and they then want after any debtors who had done well (bought a new home or got a good job)


It would not surprise me at all if that happened here.


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## Dr.Debt (5 Nov 2013)

Can I just clarify something here please with the legal eagles.

If a debtor gets a judgment against a creditor and subsequently registers the judgment as a judgment mortgage on the debtor's home, the conventional wisdom on this site regularly says that any enforcement action of the judgment mortgage will become statute barred if not carried out within 12 years.

My question is this - If after the judgment mortgage is obtained, the debtor agrees to pay the creditor 20 euro per month, Is this enough to keep the enforcement option open. In other words, If the debtor continues to pay 20 euro per month to the creditor, he is acknowledging and part paying the debt. Does this mean that the creditor can extend enforcement action beyond 12 years


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## 44brendan (5 Nov 2013)

That has always been my understanding of the position. A JM is similar to a Legal Charge. monthly or other regular payments are an acknowledgement of the debt. The period of limitation only commences from the time of last acknowledgement. In this case the period would start from the time of the last instalment payment.


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## Time (5 Nov 2013)

The JM can only be enforced for a period of 12 years from the original judgement. This applies whether the debtor is paying anything or not.

So in the example given, the debtor agrees to pay 20 a month. Once the 12 years have elapsed the debtor can stop paying. The creditor would be unable to enforce any further.


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## Kine (5 Nov 2013)

Time said:


> They can try and proceed after 6 years but you then have to raise a statute barred defence. You could accidently acknowledge the debt after the 6 years and it would restart the clock and give a statute barred debt a new lease of life.


 
How do you accidently acknowledge the debt if the 6 years have expired?


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## Time (5 Nov 2013)

By making an admission, making a payment 1 cent is enough.


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## Kine (5 Nov 2013)

Ah ok, that simple, I thought once the 6 years had passed that was it. 

It would be a monumental accident to acknowledge the debt after that!

So, how does one get it removed from your credit score without acknowledging there was a debt to begin with?


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## Time (5 Nov 2013)

It should fall off after 6 years any ways.


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## Dr.Debt (5 Nov 2013)

Hi Time

I know you have repeatedly said this however a recent conversation with a very senior banker has managed to thrown me into some doubt. His view was that the regular payments / acknowledgmet, even after the judgment had been put in place means that the statute of limitations period concerning the enforcement does not actually commence until all acknowledgment and part-payments cease.

This has come to my attention recently as Ive noticed a few different banks appear to be willing to take very small monthly installments on judgment mortgage debt. Im just wondering if the reason is to try and extend the enforcement period beyond 12 years.

I'd love to be able to get my hand on some source legislation that might confirm this one way or the other. Can anyone help ?


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