Can debts be time barred

Can debts be time barred?

The law does not recognize stale claims. Such claims have an element of cruelty and injustice. The memory of witness may fade over time or documents may get lost or destroyed. Some creditors take so long to decide whether to sue a debtor or otherwise. They have overlooked the problem cases year by year. When they found out one day that some debtors have to be sued in order to recover the debt, it may be too late.

Under the Limitation Act 1953, there is a time limit in which a creditor can take legal action against a debtor. If the creditor sleeps over his rights after the time limit, he has no legal remedy. The legal time frame is illustrated as below:

Contractual Action - 6 years from date action accrued. Time runs from the date of accrual of the cause of action which shall be the date where creditor has the right to sue.

· Action upon any judgment - 12 years from the date on which the judgment became enforceable.

· Action to recover land - 12 years from the date when the right to receive the money accrued.

· Action to recover principal secured by charge - 12 years

The law provides for extension of the limitation period in certain situations only, such as:-

(i) where the person to whom the right of action accrues (creditor) is under a disability. For example, infancy or temporary insanity;

(ii) where a debtor administers the estate of his creditor;

(iii) where there is fresh accrual of the cause of action arising out of an acknowledgment or part payment of the debt by the debtor; or

(iv) where the action is based on the fraud of the defendant or the right of action is concealed by the fraud of such person or the action is for relief from the consequences of a mistake.

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