Can a debt be time-barred?
Yes, after a certain period of time (depending on the case) and if specific conditions are met, the statute of limitations on the debt can take place. Then its repayment becomes only the goodwill of the debtor. For detailed rules on the statute of limitations on debts, see. Civil Code. Art. 117. § 1. indicates that: “Subject to the exceptions provided by law, property claims are subject to the statute of limitations.”
One such exception is the mortgage. The statute of limitations on the debt owed to the bank applies only to interest in this case. In addition, after a certain period of time, the bank has the right to sell the property (e.g., using a bailiff auction) and thus recover the outstanding funds. It can do so even when the theoretical statute of limitations for claims has passed.
What is the statute of limitations on a debt?
What exactly is a debt statute of limitations and what does it consist of? The statute of limitations on a debt is defined as the point at which the debtor no longer has a legal obligation to pay the debt. If there is a statute of limitations on claims, the debtor can no longer be pursued by a court, bailiff or other institution (such as a debt collection company).
This makes it legally unnecessary for him to pay his creditor. He can still do it, however, it is only his goodwill.
Remember, however, that a time-barred debt does not disappear and is not automatically cancelled. At a particular point in time, the obligation to repay it simply ceases. Information about the unpaid obligation is still found, among others. in the BIK, which lowers creditworthiness and reduces credibility, such as in the eyes of investors or contractors.
Art. 1171. § 1. of the Civil Code further indicates: “In exceptional cases, the court may, after considering the interests of the parties, disregard the expiration of the statute of limitations for a claim against a consumer, if equity so requires.”
When is a debt time-barred?
After what time does the statute of limitations for a debt expire? According to the Civil Code, the standard statute of limitations is 6 years. For business debts, the period is 3 years. If the claim involves periodic benefits, the debt is also barred after 3 years. How do you calculate the statute of limitations on a debt?
The most important moment is the so-called due date of the claim. This is about the day from which the debt is calculated – which is really the day that falls after the due date for payment of the obligation.
EXAMPLE
When you issue an invoice, the due date of which is September 14, 2022, the due date of the claim is September 15, 2022. And it is from September 15, 2022 that the time is counted until the statute of limitations on the debt (several years). That is, in other words: it is from this date that the statute of limitations begins to run.
The exact date is given in Art. 18 of the Civil Code: “[…] the end of the statute of limitations is on the last day of a calendar year, unless the statute of limitations is less than two years.”
If the moment of payment passed on September 14, 2022, and the statute of limitations for claims in this case is 3 years, the statute of limitations runs until the end of the calendar year 2025.
Remember, moreover, that the end of the statute of limitations is determined for each installment separately (if, according to the contract, repayment is made in parts). This is what it looks like, among other things. The statute of limitations on bank debt.
The statute of limitations on a debt – the statute of limitations with a debt collector, a fine, a loan, etc.
Although the basic statute of limitations for a debt is 6 or 3 years, there are many different exceptions described in the law. What are the most common periods after which the debt cannot be legally claimed? Here are examples:
- 1 year: ticketless transportation ticket fine,
- 2 years: debit on account, unpaid invoices,
- 3 years: telecommunications services, rent, credit or loan (bank, instant), criminal fine,
- 5 years: the statute of limitations on debt for unpaid income tax, VAT, Social Security or RTV subscription.
And is it possible to statute of limitations on a debt with a bailiff? Theoretically, once the court refers a case to a bailiff, the debt can become time-barred after 6 years. In practice, the statute of limitations on debts in bailiff enforcement is virtually impossible, because there is little chance that the bailiff will simply “let it go.”
What is the interruption of a debt’s statute of limitations?
While some people think that simply not paying for a few years is enough to avoid paying off debt – this is not always true. There are specific actions that make it possible to interrupt the statute of limitations on a debt. After the occurrence of any of them, the statute of limitations runs anew (it is not stopped, but counts again).
What interrupts the course of the statute of limitations? Key sample activities include:
- To undertake mediation or negotiation to resolve the matter amicably,
- starting a case in court,
- Submission of a request for recognition of debt,
- granting of an enforceability clause,
- transferring any amount to repay the debt (even if it is only a small part of the total),
- application for bailiff enforcement.
Thus, the statute of limitations on debts occurs only if neither the creditor nor the debtor takes any action within a specific period of time to have the money repaid. Such actions can be taken even at the very end of the repayment period, such as when there are only a few days left until the statute of limitations.
Limitation of debt in practice
How exactly is the statute of limitations on a claim step by step? It is worth learning all these mechanisms in practice.
Mr. Jan has not paid an invoice amounting to 10 thousand zlotys. The due date for payment was May 15, 2022. The due date of the claim for such an obligation is therefore May 16, 2022. In this case, the statute of limitations for the debt is 2 years. If no one interrupts the statute of limitations on the debt by December 31, 2024, as of January 1, 2025, Mr. John will have no obligation to return the money.
Where to check if a debt is time-barred?
How to check the statute of limitations on a debt? It is best to review contracts, invoices, etc. in search of a repayment date. Later, you can count exactly how much time has passed. Another way is to review the BIK and BIG records. All unpaid obligations are located there.
How to prove the statute of limitations on a debt?
The law is on the side of the debtor in this situation – after the expiration of the statute of limitations and in a situation where all conditions are met, he is not obliged to return the money. From the entrepreneur’s point of view, therefore, the best option is to scrupulously keep an eye on one’s counterparties and possibly assert claims before maturity.
Practice shows that in most cases an effective method of recovering debts and preventing debts from becoming time-barred is to initiate mediation. This is a method that shows that the entrepreneur wants to resolve the matter amicably. Litigation is something that, as a rule, both parties want to avoid, so in the vast majority of cases mediation is followed by repayment of the debtor’s obligation.
And what if the case is brought before a court or, for example, a collection agency – and the debt is already time-barred? At that point, the debtor can raise the statute of limitations, and the court will likely dismiss the case.
What is the recognition of a time-barred debt? Recognition of debt vs. statute of limitations
Acknowledging the claim, paying off part of the amount, or entering mediation before the basic statute of limitations actually expires – among other things – causes the course to be interrupted. However, the debtor can make the statute of limitations run completely anew.
But what if the debtor recognizes the debt as time-barred, such as by filing a specific application? This does not yet mean that the deadline will start running anew. However, such behavior can be interpreted by the court in a special way.
Which one? He may consider that the person has voluntarily waived the possibility of invoking the statute of limitations on the claim. And this will result in the need to pay. However, everything depends on the individual interpretation of the judge.
What are the effects of the statute of limitations on a debt?
Once the statute of limitations on a debt is reached, the debtor has no legal obligation to pay it. However, defaulting is simply dishonest.
The statute of limitations on a debt does not result in its cancellation, so it does not disappear from the records. What does this mean in practice? It is still visible, for example, in BIK and BIG. Only those debts that have been written off (e.g., in court) or that have been paid are removed from the register. A time-barred debt is still an unpaid obligation.
A person with a time-barred debt may find it difficult, for example, to obtain a loan or lease, find contractors, buy life insurance or get business development support from an investor.
Time-barred debts can be removed from the debtors’ registry only by paying them off, or possibly after a settlement with the creditor (suspension of publication of such an entry). In addition, it is always worth negotiating and asking, for example, for the obligation to be divided into installments, instead of indefinitely evading payment. This is especially good for entrepreneurs who care about credibility in the eyes of contractors.
