The debt collection clock is ticking
Photo Credit: Alan Cleaver via Compfight cc


If you have an outstanding debt that is several years old, it is important to take action promptly if you still hope to recover the funds that are owed to you.


First of all, it is naturally easier to pursue a more recent debt – it is more likely that both parties remember the work that was involved, more likely that the invoice is still on record somewhere, and less likely that the debtor has gone bust or ceased trading in the interim.


But debts even up to six years old can still be pursued – and where you are able to include statutory interest on the amount owed, that can add up to substantial amounts of money.


The important thing is to ensure the debtor acknowledges in writing that they still owe you the money, and that they are still liable to settle in full.


Limitation Act 1980


The Limitation Act 1980 sets out the terms by which your right to reclaim a debt can be extended, beyond the initial six years from when the payment becomes due.


Section 30 states:


“To be effective for the purposes of … this Act, an acknowledgement must be in writing and signed by the person making it.”


Partial payment of the amount owed can also reset the clock, giving you longer to reclaim the rest.


The Act also clearly states that any payment of interest accrued on the original debt qualifies as a payment towards the debt itself, and should be treated the same in terms of its impact on the deadline for claiming the remainder.


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