“YOUR DEBTS WRITTEN OFF” … TOO GOOD TO BE TRUE?

advice centreI recently quoted from a post on StepChange’s “Moneyaware” blog: that’s a blog I like a lot.

Their online strapline says “The StepChange MoneyAware team help you avoid debt with practical advice and tips on saving money, budgeting, debt news and ways to stay on top of bills.” From what I’ve seen, the blog pretty much “does what it says on the tin.” And it does it very frequently, which is more than you can say about yours truly.

Moreover it has a sense of humour. One post, about the World Cup, begins: “In the MoneyAware team we have a healthy mix of football-mad enthusiasts and those who are vaguely aware there’s some reason EastEnders isn’t on at the usual time.”

An older post (August last year, I think) asks if you can ever believe it when someone says they can get all your debts written off.

“Your debts written off” – can you believe such a claim?

In my book I wrote extensively (Chapter 9, “Out of Your Hands” and Chapter 10: “Negotiate a Deal”) about ways of getting a proportion of your debts written off; and lots of advisers can help you do just that. But 100%?

The conclusion, in general, was no. In other words: “when something seems too good to be true, it generally is.”  However, then I read (and this surprised me) that in some circumstances a specific debt can be written off 100%, if it is “statute barred” through a piece of legislation called the Limitations Act.

To quote from the StepChange blog:

“This is the only real piece of debt law that could see your debt deemed unenforceable.Creditors are unable to legally pursue you for the debt if, after six years:

  • The creditor has not already obtained a county court judgment (CCJ) 
  • You or anyone else owing the money (on a debt in joint names) have not made a payment 
  • You have not written to the creditor admitting you owe the debt

So, I hear you cry, ‘All I have to do to get my debts written off is ignore the creditors and not pay them anything for six years!’

Erm no, not really, that wouldn’t actually work.

As the above explanation suggests, if you start to ignore your creditors they’re liable to get in touch with you rather quickly and may even do this through the courts, by obtaining a CCJ or other debt collection procedure available to them.

‘Okay, I’ll move house and not tell them!’ some might shout.

“That really won’t work either as it’s your responsibility to keep your creditors updated with your current address. Moving house and not telling your creditors where you’ve gone is seen as debt avoidance. This isn’t recommended.

The Limitations Act

“The Act isn’t there to encourage debt avoidance or non-payment and most judges will take a dim view of this tactic. It’s there to protect people from being forced to pay debts that have ‘timed out’ through no fault of their own.

“The money owed itself is not written off; it’s still a debt and in reality it still exists (and presumably remains on your credit record – Ed.) but with the Act in force the creditor can no longer enforce the debt.”

 

WANT TO KNOW MORE?

For the StepChange post in full, click HERE.

 

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