It happens that consumers for a different reason cease to repay their liabilities in a timely manner or they do not regulate one-time ones. This can have negative consequences, as it is in the interest of the creditor to take effective action to recover the money. However, the debt may “expire”. What does the statute of limitations mean?
Financial arrears may arise for a variety of reasons, have different amounts, and similarly vary in duration. However, there are features that connect them. The financial obligation that we had to settle on time from the first day of delay may be called debt. The creditor has the right to undertake activities aimed at enforcing payment.
Creditors can also charge interest rates from the first day of delay, and their billing rules are legally regulated (in the case of loans and credits, through dedicated subscriptions). It is in the interest of the consumer to undertake activities that will avoid the most severe consequences of the lack of timely repayment of the obligation. He should negotiate, for example, spreading the debt into installments, and even postponing the repayment date and redeeming interest.
Consumers who, however, do not make contact with the creditor, can get into serious trouble. In addition to the day-to-day interest in criminal penalties, the creditor can claim his money through a debt collection agency. It can also turn to the court, which in some cases will eventually end up even bailiffs’ execution. We presented the scenario on the principle of a passive debtor – an active creditor. But what if the creditor does not take action to recover the debt?
What is the limitation of debt and what is the limitation of debt?
If he does not do it quickly enough, a debt lapse situation may arise. It occurs when the creditor fails to advise on time for the money the debtor is in default of. The term “on time” is key here because each debt has a defined validity period. If it is exceeded when the creditor is passive, theoretically – the debtor loses the obligation to repay such a commitment.
The issue of prescription of debt is regulated by the Civil Code, and more specifically – Article 118. Its last amendment took place in July 2018, which considerably simplified the rules of, for example, limitation periods. The validity period of a debt is regulated and strictly determined depending on the type of liability.
When the debt expires?
As mentioned above, the debt is uneven. The consumer may have a different amount for different types of liabilities and in different time periods. The Civil Code, for this reason, distinguishes different periods of validity of a given debt.
- The period of limitation of debt, for which there are no precise legal regulations – 6 years.
- Limitation of debt that is a periodic benefit (ie, for example, rent for a flat) – 3 years.
- The period of limitation of debt related to running a business (eg unpaid invoice) – 3 years.
When do other debts lapse?
Among the above-mentioned information, mention was made of debts whose time of limitation is not regulated at the same time by other provisions. For them, the period of limitation is always 6 years. However, there are many other types of debts whose principles include prescription periods are set out in dedicated legal provisions.
- If the debt results from the employment contract, it expires after 3 years.
Example – an employer is in arrears for a person employed on a contract of employment for a long time.
- If, in turn, the debt results from civil law contracts, it expires after 2 years.
Example – the employer is in arrears with payment for an employee employed under a contract for a specific work.
Important! Limitation is counted from the day the order was executed.
- The debt resulting from the insurance contract expires after 3 years.
Example – unpaid insurance for real estate insurance.
- In turn, the debt under the third party liability insurance contract expires after 3 years.
Example – non-payment of a purchased OC policy for a car.
- The inheritance debt expires after 6 years.
Example – a debt that the heir did not renounce.
- If the debt comes from rent debt – it expires after 3 years.
Example – a long-term unpaid rent for a flat to a person who rents it for us.
- The debt resulting from the contract of carriage – it expires after 1 year.
Example – unpaid ticket for a ticket without a ticket.
- The debt resulting from the unpaid penalty mandate expires after 3 years.
Example – unpaid speed ticket.
- If, in turn, we talk about the debts resulting from social security contributions – they expire after 5 years, if they were created after 2012 or after 10 years, if they were created before 2012.
- When we talk about debt resulting from unpaid income tax – it expires after five years.
- When it is a debt resulting from an unpaid property tax, it expires after three years.
- The credit card debt expires after 3 years.
Example – a debit on a payment card that has not been repaid.
- When we have not repaid the loan – the obligation to pay back the loan goes as a limitation period after 3 years.
- Claims that have been confirmed by a final court verdict are, in turn, time-barred after 10 years.
Example – the court ordered payment of compensation for the victim’s family in the event of driver’s fault. The court’s judgment, if for 10 years he / she does not make any attempts to contact the convicted persons, expires after that time.
Limitation of debt – what next?
If the conditions for limitation of debt are fulfilled, i.e. for the required period, the creditor will not take any action to recover the money, the debtor will not be obliged to repay the debt. However, this does not mean that the debt ceases to exist.
The creditor may try to demand that the money be recovered even after the statute of limitations, for example, by court. In the case of an attempt to enforce the debt through a court, the debtor must prove that the debt has expired, which of course the lawyer’s services will be useful for. The creditor, in turn, will also have to argue his line, presenting to the court, for example, proof of sending a reminder, which allegedly did not reach the debtor. Until the court issues the judgment, the debtor is not obliged to pay the amount of money at issue.
A person or other entity with overdue repayment also has the right to attempt peace mediation by asking for a refund through negotiations and an amicable agreement. In this case, it is in the interest of the debtor to attempt to agree to avoid the potential forensic scenario mentioned above.
How does the debt limitation rule work?
We already know the length of time after which the debts due to arrears for the payment are debased. It is also worth noting on what terms the debt stage and the stage when it is legally recognized as invalid count in general.
The duration of the debt begins from the first day after the repayment deadline. In order to meet the statute of limitations, at a given time (eg 2 years), the creditor can not undertake any debt collection activities or even be unable to contact the debtor.
If he does, the debt will automatically cease to be qualified as aging. What is worth remembering, the creditor may not send, for example, a reminder even for a long time.
Assume, after the payment date, he did not contact the debtor with payment for rent for a year. However, if you send a call for payment after 12 months – you can treat it as taking action to recover money. Thus – the so-called limitation period is calculated from the beginning.
It is worth adding, however, that if the creditor has already asked for repayment of the debts, he will probably continue to take action to recover the money. Thus, the chances of limitation are in this case low and it will be more advisable to mediate with the creditor. This will avoid potential negative consequences for the consumer.
How to check the expiration of debt?
The answer to this question, given the above-mentioned information, is therefore simple. The easiest way to check the debt limitation period will be to find the documents related to the obligation.
It may be a contract of employment, a flat rental agreement, a loan agreement, etc. Such a document should indicate the date on which the obligation should be settled. The first day after the repayment deadline has expired, it is treated as the duration of the debt.
Depending on the type of obligation, you should check (preferably with the calendar in hand) whether the deadline has expired. E.g. The day of payment for the rent is every first working day of the month – February 1. The debt became effective on the second working day of the month – February 2.
The rent for renting the flat was not paid from February 1, 2014. The rent liability according to the law becomes statute-barred after 3 years. In this way, the debt expired after February 1, 2017. We would like to remind you that the limitation period is only met if, for the said 3-year period, the creditor has not made any attempts to contact the debtor and has not informed him of his claims.
It is worth having always a safe place in a safe place, which was the basis for making a commitment. It will allow you not only to check whether the debt has expired, but also will be a valuable argument to defend in court. As mentioned earlier, the creditor can always try to enforce the debt through a court. Demonstration by the consumer that he no longer has to pay back the debt.