Q. About 15 years ago I had started my own business and had managed unfortunately to run up large debts which I wasn’t able to sort out. The business had to fold. I tried my best to sort out various suppliers and banks etc., but it is fair to say that there was a sizeable sum owed. These debtors have ‘given up’, so to speak, and I don’t think I’ve heard from any of them for a few years. I am now coming into a few bob from a home sale and I want to know where I stand. If I have to, I will pay off the debts, but given the length of time I wonder do I have any legal liability to do so?
Dear Reader,
Quite a bit would depend on whether or not the debts were owed by your company, or whether you owe them personally (or perhaps you personally guaranteed a business debt). If the debt was owed solely by your company, you did not give any element of a guarantee, and the company has since been wound up, there is no liability on you.
If you do owe these loans personally, what steps might be open to them would greatly depend on timing.
If they took legal proceedings and obtained a judgement against you, that judgement is valid for 12 years after it is obtained by the bank. Again, you should check with your solicitor or your own record to see whether any judgements were obtained and their dates.
If the debt was owed, but no court proceedings were ever initiated, again the debtor would have six years to initiate proceedings. It is likely, therefore, that if the debt arose more than six years ago and has been left alone by all parties, then no further action can be taken.
That said, if you had acknowledged the debt in writing or part paid the debt within the last six years, that might have restarted the ‘clock’ and it might still be open to the credit to now seek to obtain a judgement.
It might also be the case that some of your creditors themselves might no longer be operating (such as certain banks or suppliers). You should liaise closely with your solicitor.
The Money Advice And Budgeting Service or MABS have a very useful service for people in financial difficulties and this may also be useful if sums are owing.
