One of the most misunderstood ideas in debt recovery is the notion that an unpaid debt lasts forever. It does not. In England and Wales the Limitation Act 1980 sets a time limit for bringing a claim, and once that limit passes the debt becomes statute-barred. Understanding this clock is essential before you decide whether to chase, sell or write off what you are owed.
What does statute-barred actually mean?
A statute-barred debt still exists — the debtor still owes the money in principle — but the creditor can no longer enforce it through the courts. If you issue a claim on a debt that is out of time, the debtor only has to raise limitation as a defence and the claim fails. In practice that makes the receivable almost impossible to collect and, therefore, almost worthless on the open market.
How long is the limitation period?
- Simple contract debts (invoices, most loans, credit agreements): 6 years from the date the cause of action arose.
- Debts under a deed (a specialty): 12 years.
- County Court Judgments: there is no limitation on enforcing the judgment itself in the way a simple contract has, but you generally need the court's permission to enforce a judgment older than 6 years, and interest is limited to 6 years' worth.
When does the clock start?
Usually from the date the debt became due — for an invoice, the day payment was contractually required. For an ongoing account it can be the date of the last transaction. Getting this date right is the single most important part of assessing whether a debt is still alive.
The clock can be reset. If the debtor makes a part payment or gives a written acknowledgement of the debt, the six years start again from that date under section 29 of the Act.
Why this matters when selling a debt
Debt buyers price time. A debt with five years still to run before it is statute-barred is far more attractive than one with three months left. If you are sitting on an ageing invoice, every month you wait erodes its market value and brings it closer to being worthless. Selling sooner protects the value that is still there.
How to protect the value of an ageing debt
- Get an acknowledgement in writing. A simple email or message where the debtor admits owing the money restarts the clock and lifts the price.
- Keep evidence of any part payment — even a token £10 payment resets limitation.
- Do not let it drift. If you are not going to litigate yourself, list it for sale while there is still runway.
Can you sell a statute-barred debt?
Technically yes — the debt still exists and can be assigned — but its value is minimal because it can no longer be enforced in court. Some buyers will still take on nearly time-barred debts hoping for a voluntary payment or an acknowledgement, but expect very deep discounts. The lesson is clear: the best time to sell is well before the limitation period runs out.
Conclusion
Limitation is the silent enemy of every creditor. A perfectly valid debt can become commercially dead simply because too much time passed. Know your dates, chase an acknowledgement where you can, and if you are not going to pursue the claim yourself, put the debt on the market while it still has value.
