Plans to reduce the time period for which lenders can legally pursue consumers for civil debt have been shelved by the Government. 

The Ministry of Justice initially proposed to reduce the time limit that allows lenders to chase civil debts from the present 6 years to 3. 

The whole credit industry opposed the moves citing that the courts would not be able to cope with the deluge of new cases as creditors would have to move fast, and in some cases overnight, to stay within the new proposed 3 year limit. It was generally agreed that the system just would not cope.

Creditors are given a fixed period of time to chase their debtors, which is outlined in the Limitations Act 1980. The time scale mainly depends on the type of debt and can be extended at the courts discretion. The time limit begins when you last admitted owing the money or made a payment. This Act applies to residents of England and Wales.

Should the creditor fail to maintain contact with the debtor, for a period of 6 years or more, it is possible to claim that the outstanding debt is "Statute Barred" under the conditions of the Limitations Act 1980.

What to do if a creditor contacts you after 6 years

• Do not admit to owing the money
• If you accept you owe the money then you may well be required to pay the debt back. If a payment is made, even after a 6 year gap, then the debt may still be unenforceable.

If you are contacted by a creditor with whom you have not had any communication with for 6 years or more then you should write to them quoting the Limitations Act 1980, do not admit acceptance or responsibility, send it recorded delivery to prove postage. We have a template letter for you to use.

We have more information covering limitation periods for council tax debts, mortgage shortfalls following repossession, benefit overpayments, HMRC (Income tax and VAT) and those debts already covered by a county court judgement (CCJ) at the  Debtwizard guide to dealing with old debts.

Debtwizard comment

I feel 6 years is long enough for any lender to get their act together in setting about to recover unpaid debts. 

The problem arises when the debts get sold on many, many times often with little or no previous correspondence attached between the borrower and lender. 

This can cause enormous anxiety and confusion to the consumer as they have to start the whole process again of claiming the debt is statute barred. I know there will be provisions to remedy this from the OFT next year.