Statute barred debts. Are my debts written off?
What happens to your debt six years after defaulting
“My debt has defaulted; I’m making token payments towards it, but only for six years. After that it’s written off. Happy Days!”
We can’t tell you how many times this assumption has been made by many people we have spoken to over the years. Let’s make something clear from the start, this assumption is incorrect.
TRDG is here, yet again, to separate the myths from the facts.
Let’s first look at when a debt can be written off:
Not in the mood to read? We got you covered. Listen instead by clicking YouTube link at the bottom of the page.
Commercial Decision
Debt being written off is usually a commercial decision by the debt owner. If they believe the circumstances surrounding the debt means the debt simply isn’t worth pursuing, they may cancel the debt (write it off).
This doesn’t happen very often as usually the debt owner will choose the “sell” route. You can learn more about this by reading our article Discount debt offer: Make sure the price is right.
Partial Write Off
The debt owner may agree for you to pay a reduced amount to clear the debt, with the remaining amount written off. This is known as a Partial Settlement, there’s more to this than meets the eye though.
The Real Debt Guy has you covered of course; we have an entire article on Partial Settlement Explained – Can it help you? is that will give you a clear understanding.
Of course, there may be legal or contractual circumstances that mean the debt is written off, but we’re just focusing on the most likely reasons. Let’s not get too technical.
Six years later...
The bad news first is your debt still exists. So, if you're making payments towards the debt, you’ll need to continue to do so based on your affordability and keep communicating with the creditor.
If you haven’t been making payments or communicated about the debt with whoever is handling the debt, there may be good news.
Your debt may be statute barred, meaning you can’t be taken to court over the debt. It’s very important to read our article - Do you have Statute Barred debt? - to be sure you fall into this category. Don’t just assume, double check.
What about my credit file?
Another bit of good news, after six years of the debt being registered as a default on your credit file, it disappears.
The six years is like a punishment for defaulting (that’s if you think not being able to get yourself into more debt easily for six years is a punishment...).
Don't forget to read The Real Debt Guy's final thoughts below!
The information in this article is considered to be true and correct at the date of publication.
