Tuesday, 5 February 2019

Credit Card Debts: How Long Does Creditor Have To Sue?

If you owe money, your creditor generally has six years within which to sue you (see chapter 10 of my book Breaking Law). After that, you are usually off the hook and have a good defence to any claim they start against you in court; the You Are Too Late, Mate, Defence.

Here is the conundrum. With a credit card debt, from when does the clock start ticking - from when you default with payments or from when you  subsequently fail to comply with a written default notice which the creditor must send you before taking you to court? 

The conundrum has just been solved by the Court of Appeal in Doyle v PRA Group (UK) Ltd [2019] EWCA Civ 12 where the cardholder was said to owe over £26,000. It was ruled in that case that the six years starts  from the later date. That's when you fail to comply with the default notice. 

But say you creditor waits for an eternity after you have defaulted with payments before sending out the default notice. That could lead to you being prejudiced and having a court  claim form come hurtling through your letterbox many years later when you had thought the debt had gone away. In that situation, you might be able to get the debt wiped out or reduced by asking the court to exercise its 'unfair relationship' powers under sections 140A and 140B of the Consumer Credit Act 1974.