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bigduckontax, Accountant
Category: Tax
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Hello, I have an account regarded as defaulted since the year

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I have an account regarded as defaulted since the year 2010.
Is it true that if I do not pay back those money until 2016 means I will not owe them anymore?
Hello, I'm Keith and happy to help you with your question.

The Statute of Limitations is six years for debts, but for debts under seal it's 12 years in England and Wales, but this does not apply to tax debts. Furthermore the six years runs from any demand or call up on the debt so watch out for this.

Here is a useful summary from, surprisingly, HMRC:

'If a lender allows time to pass without receiving any payment an action for recovery may become barred.

Under the Limitations Act 1980 the time limits are:

In simple contracts, 6 years

In contracts under seal, 12 years.

If the debtor acknowledges the debt in writing or makes a part payment within the original limitation period, then the time limits start to run again from the date of acknowledgement or the date of payment.

Even though the lender may be barred from pursuing recovery, a debtor may decide to pay the debt after the expiry of the time limits. Because of this you should allow a debt which is otherwise statute-barred if the personal representatives pay the debt and you receive evidence that the payment has been made.'

I do hope I have helped you with your question.
Customer: replied 3 years ago.

Thank you!

Do you count pay day loans as simple contract?

Simple contracts are those not under seal. As to whether yours with a payday loan company was under seal or not you will have to check your documentation.

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