Disputing a debt

You may be able to dispute a debt in certain circumstances.

The following may provide defences to a claim against you:

  • agree that you owe the debt but do not agree with the amount
  • have already paid the debt
  • do not think the debt is yours
  • the debt is statute-barred

as an example, you agreed to the contract but you:

  • were told something that was not true (you were misled into signing)
  • were forced to sign or were taken advantage of (even by a family member)
  • did not receive goods or service for which the debt is due
  • did not have the capacity to repay the credit (e.g. credit card) at the time you signed the contract (see also consumer credit)

You need to ensure that you have as much information as possible to prove your defence, although you may not have everything in writing. If you are relying on what you were told, make a note of as much detail as you can remember. Sometimes you will be asked to recall that information many months or even years later and it is much easier if you have a record.

Statute Barred Debts

  • If the debt is more than six years old and you have not made a payment or acknowledged the debt in writing it may be "statute barred". This means the creditor cannot legally collect the debt or take court action.

A creditor is legally barred from pursuing an unsecured debt if they have failed to do so within six years of the debt arising. If the claim against you is in relation to a loan, the date from which the six years runs is the date of the first missed payment, not the date of the loan.

Any action on your part may affect this limitation period. For example, if you have made any payments during this time then the six year period begins again. The same is true if you have made any communications in writing admitting to owing any money or a court order has been made in that time against you. If you are unsure about whether this is the case, seek legal advice before you speak to your creditor or make repayments.

Where a debt is secured by a mortgage over property the period during which a creditor can make a claim for payment is 15 years.

Be aware that you may incur additional costs if the Court finds that there was no basis for questioning the debt.

If you think you might have a defence you need to get legal advice immediately. You will only have a period of 21 days from the date you received the claim to file your defence. Get help with working out whether or not your defence has merit (eg is it a good defence) and how to set it out.

If you do not think that you should have to pay a debt it is important that you talk to the creditor or get help.

If you are unable to come to an agreement with the creditor you may be able to organise mediation or if the creditor is a member of an External Dispute Resolution Scheme, you can lodge a complaint with the scheme. Not every organisation is a member of an EDR scheme so it is best to get legal advice about your problem. For more information, see 'External dispute resolution'

Disputing a debt  :  Last Revised: Thu Nov 28th 2013
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