How Long Can You Legally Be Chased for a Commercial Debt in the UK?

In the UK, the statute of limitations for pursuing a commercial debt is typically six years, starting from the last acknowledgment or payment date.

Jun 04, 2024

Two men or lawyers talking about a business contract

After six years, the debt becomes statute-barred, meaning it can't be legally enforced through the courts. However, the debt remains owed but unenforceable through legal means.

In this guide, our expert explains the duration and limitations of commercial debt recovery in the UK, providing insights into the legal framework of debt collection. It clarifies key aspects for creditors seeking to recover funds and debtors understanding their obligations.

Key Highlights:

  • The article covers essential aspects such as the statutory period for chasing commercial debts, circumstances that can extend or reset the limitation period, events that start the limitation period, impact of acknowledgment and payment, compliance with commercial debt collection laws, and consequences of missing the limitation period. 
  • It provides detailed insights into how creditors and debtors navigate the UK legal framework, including the triggering events for debt recovery, acknowledgment and payment requirements, and compliance with laws like the Consumer Credit Act 1974 and FCA guidelines. 
  • Understanding these laws and their implications is crucial for businesses to ensure lawful debt collection practices and protect their legal rights while pursuing or defending against commercial debt claims.

Statutory Period for Chasing Commercial Debts

In the UK, commercial debts can typically be pursued for six years under the Limitation Act 1980, which sets the rules for how long a creditor has to take legal action to recover a debt. The six-year period usually starts from the debt's due date, the agreed-upon payment date when payment wasn't made. For example, if an invoice was due on January 1, 2024, legal action must be initiated by January 1, 2030.

Understanding "the date the debt became due" is vital for both creditors and debtors, marking the moment when the creditor has the legal right to demand payment. This date varies based on contract terms or regular billing cycles for ongoing services.

After six years, a statute-barred debt remains valid but can be acknowledged or paid voluntarily by the business debtor. Creditors should act promptly within this period to retain their legal right to claim the owed money. In disputes over the debt's due date, seeking expert business debt collection advice is crucial, especially for complex agreements or delayed invoicing scenarios.

So, both parties should focus on clear communication and documentation to adhere to the limitations period, preventing legal issues and enhancing business relationships.

Circumstances That Can Extend or Reset the Limitation Period

Certain circumstances can extend or reset the limitation period for pursuing commercial debts in the UK.

  • For instance, if the debtor acknowledges the debt in writing, it resets the limitation period.
  • Likewise, making a partial payment towards the debt resets the period from the payment date.
  • If the creditor obtains a court order against the debtor within the limitation period, the period may also be extended.
  • The limitation period extends if the debtor promises to pay in writing or agrees to a new payment schedule.
  • Bankruptcy or entering into an Individual Voluntary Arrangement (IVA) may suspend the period until discharge.
  • If the creditor requests and the court grants an extension, the limitation period extends accordingly.
  • The limitation period may follow the security agreement's terms if the debt is secured.
  • Disputes over commercial debt or its terms can affect the limitation period, particularly if legal action is taken.
  • Formal agreements between creditors and debtors to extend payment time can affect the limitation period.
  • Instances of creditor unawareness about debt or debtor's identity can extend the limitation period upon awareness.
  • New relevant evidence regarding the debt may extend the limitation period.
  • The limitation period might be affected if the debtor is absent for a long time.

Overall, creditors and debtors must be aware of these circumstances as they can significantly affect the timeframes for pursuing or defending against commercial debt claims.

Contact Payfor to Collect Your Debt On Time

Events That Start the Limitation Period

In the UK, the limitation period for commercial debts commences with specific events outlined in the Limitation Act 1980. These events include the due date, marking the agreed-upon time for payment. If payment is not made promptly, the limitation period begins.

In cases of ongoing contracts or services rendered over time, the due date may be determined by regular billing cycles or contract terms. Another triggering event is the debtor's last acknowledgment of the debt, either through written communication or partial payment.

Additionally, the limitation period begins with the last payment made towards the commercial debt, typically starting from that date. Legal action initiated by the creditor against the debtor also marks the beginning of the limitation period.

Understanding these trigger points helps parties effectively manage their obligations and rights concerning commercial debts within the UK legal framework.

Impact of Acknowledgment and Payment

Partial payments and written acknowledgments by debtors can reset the UK's six-year limitation period for commercial debts. For an acknowledgment to be legally binding, it requires written confirmation signed by the debtor or their representative.

Additionally, the acknowledgment must include an unequivocal admission of the debt.

Partial payments or written acknowledgments can extend the limitation period, giving creditors more time to pursue legal action. If a debtor makes a partial payment, the period resets from that date. Likewise, a written acknowledgment resets the period from its date.

Compliance with Commercial Debt Collection Laws

Compliance with UK commercial debt collection laws is vital for businesses. These laws dictate fair practices in debt recovery, and non-compliance can lead to legal repercussions like fines. Companies must know laws like the Consumer Credit Act 1974 and FCA guidelines for debt collection. Compliance means treating debtors fairly and respectfully and avoiding harassment.

Creditors must prioritise transparency by offering clear debt details and repayment options. Regular legal training is vital to keeping up with evolving laws. Compliance upholds debtors' rights and maintains businesses' reputations.

Consequences of Missing the Limitation Period

Missing the UK's commercial debt limitation period can be detrimental to creditors and debtors. If creditors don't pursue legal action within this timeframe, they lose the chance to enforce payment through courts, potentially leading to significant financial losses.

On the other hand, debtors may benefit when debts become statute-barred after the limitation period ends. This status relieves debtors from the legal obligation to repay, though the debt still exists. However, creditors can't enforce payment through legal channels.

Missing the limitation period can hinder negotiation or settlement chances between creditors and debtors. Without legal pressure, debtors may delay repayment, straining relationships. Also, creditors risk reputational harm for ineffective debt management.

Contact Payfor to Return Your Commercial Debt in 30 Days

Legal Framework for Commercial Debt Recovery in the UK

In the UK, commercial debt recovery operates under the Limitation Act 1980, setting time limits for initiating legal proceedings. Compliance with laws such as the Consumer Credit Act 1974 and FCA guidelines is vital for lawful debt collection.

This framework enables dispute resolution and debt enforcement through the court system. It involves issuing demand letters, obtaining court judgments, and enforcing them via bailiff action or asset seizure. Legal rights are protected for both creditors and debtors, ensuring fairness in UK debt recovery. Adherence to this framework and ethical practices is crucial for successful debt recovery.


Giles Goodman - Payfor CEOAuthor: Giles Goodman, Founder CEO of Payfor Limited
Drawing from his solid experience in commercial debt collection, Giles
offers invaluable expertise in solving claims owed between companies worldwide. Through his writing,
Giles shares insights tailored to business owners, leveraging his wealth of experience to provide practical
guidance and support.

Linkedin Logo LinkedIn

Disclaimer:

This blog post is intended for informational purposes only and should not be construed as legal advice. The information provided in this post is based on general principles and may not apply to specific legal situations. Laws and regulations vary by jurisdiction and can change over time. Readers are advised to seek professional legal counsel before making any decisions based on the information provided in this blog post. Payfor Ltd is not a law firm and does not provide legal services. The company disclaims any liability for actions taken based on the contents of this blog post.

More Blogs & Insights

Judges gavel on a world map as a symbol of international comemrcial debt laws

International Commercial Debt Collection Laws Explained

International debt collection involves pursuing debts from debtors in different countries - a challenge heightened by diverse legal systems, cultures, and language barriers.

an exhausted middle aged male lawyer in his office after losing a commercial debt collection lawsuit

What Happens If You Lose a Commercial Debt Collection Lawsuit?

Unpaid debts can pose significant challenges to business financial stability. When traditional methods fail to resolve these outstanding dues, companies may take legal action, such as a commercial debt collection lawsuit.

A Commercial Debt Collection agency meeting in a conference room

When to Use a Commercial Debt Collector?

Businesses often face challenges in recovering payments from clients or customers when managing outstanding debts.

Two men or lawyers talking about a business contract

How Long Can You Legally Be Chased for a Commercial Debt in the UK?

In the UK, the statute of limitations for pursuing a commercial debt is typically six years, starting from the last acknowledgment or payment date.

What is Commercial Debt Factoring in Business

What is Commercial Debt Factoring in Business?

Companies often seek innovative solutions for cash flow management and financial challenges, such as commercial debt factoring, where accounts receivable are sold to a third-party factor at a discount.

Commercial Debt in the US When You Are in Israel

How to Recover a Commercial Debt in the US When You Are in Israel?

If you are an Israeli business seeking to recover a commercial debt owed to you in the United States, it's essential to understand the intricacies and procedures involved in such a pursuit.

Femida and a backround with books and hammer for legal debt collection

Legal Procedure for Commercial Debt Recovery

Commercial debt recovery can be a complex and challenging process for businesses. From unpaid invoices to overdue payments, encountering debtors unwilling to settle outstanding dues is a common predicament.

Businesses Benefit From Offshore Jurisdictions

How Do Businesses Benefit From Offshore Jurisdictions?

Offshore jurisdictions like Switzerland and the Cayman Islands are a prevalent strategy for companies engaged in commercial debt collection or aiming to enhance their financial and tax planning initiatives.

How to Write a Demand Letter for Commercial Debt

How Do You Write a Demand Letter for Commercial Debt?

Unpaid business debts can be challenging for commerce businesses. When traditional debt collection methods fail, turning to legal recourse becomes necessary.

How to Avoid Late Payments in B2B Transactions

How to Avoid Late Payments in B2B Transactions?

Late payments pose a significant challenge for businesses, impacting cash flow, profitability, and overall financial stability.

Commercial Debt Statistics

Commercial Debt Statistics: Facts and Numbers

Commercial debt plays a vital role in business finances, acting as both a driver for growth and a potential indicator of a company's financial stability.

Why Payfor Is Different From Other B2B Collection Agencies

Why Payfor Is Different From Other B2B Collection Agencies?

Unlike other agencies, Payfor prides itself on its unique approach to commercial debt recovery, blending industry expertise with a commitment to client satisfaction.

How to Calculate Business Debt

How to Calculate Business Debt: A Comprehensive Guide

Understanding and accurately calculating business debt is essential for maintaining financial stability and making informed decisions.

How to Recover a Debt in the US When You Are in Egypt

How to Recover a Debt in the US When You Are in Egypt?

Given the geographical and legal barriers, recovering a debt in the United States while residing in Egypt can present a formidable challenge.

Debt Collection for Startups

What are Commercial Debt Collection Challenges for Startups?

Startups often encounter unique hurdles when it comes to recovering owed funds. From establishing effective credit policies to navigating legal complexities, startups must navigate myriad obstacles to ensure timely payments and maintain financial stability.

Negotiation Tactics in Debt Recovery

Negotiation Tactics in Debt Recovery: The Psychology of Persuasion.


Commercial debt recovery is an essential, yet intricate, facet of business operations that requires an amalgamation of skills—from legal understanding to business acumen.

How to Recover Debt in the US When You're in Ukraine

How to Recover Debt in the US When You're in Ukraine?

Navigating the complexities of debt recovery across international borders presents unique challenges for businesses, particularly when seeking to recover debts owed in the United States while operating from Ukraine.

legal debt recovery as a strategic imperative

Is Legal Recovery the Answer When Your Business is Owed Money Across Borders?

When your business faces the challenge of recovering owed money from companies operating across international borders, legal recovery emerges as a strategic imperative.

Commercial Debt Collection Recovery Campaigns

How Do Commercial Debt Collection Recovery Campaigns Work?

Commercial debt collection recovery campaigns are intricate processes designed to retrieve outstanding debts owed by businesses to creditors.

Jurisdiction in Commercial Debt Collection

Why Jurisdiction Is the Most Critical Factor in Commercial Debt Collection?

When it comes to commercial debt collection, one question often trumps all others: "What is the key most important factor when chasing a debt?"

Arbitration vs Issuing Legal Proceedings

What is the Difference Between Arbitration and Issuing Legal Proceedings/Litigation?

The choice between arbitration and litigation is a pivotal decision that can shape the course of dispute resolution.

Amicable Commercial Debt Recovery

What is Amicable Recovery?

Amicable Recovery is a consensual and cooperative debt collection method that aims to settle outstanding payments without resorting to judicial measures. This process often commences with a courteous reminder, followed by mutually beneficial negotiations, in an effort to secure payment.

What is Jurisdiction in Global B2B Debt Collection

What is Jurisdiction in Global B2B Debt Collection?

Jurisdiction determines the legal authority and framework within which commercial debt collection efforts can be pursued across international borders.

Determine if a Debtor is Solvent

How to Determine if a Debtor is Solvent Enough to Repay Debt: An Expert Guide

In the intricate world of commercial debt collection, one of the most challenging yet imperative tasks is assessing the solvency of a debtor.

Small Business Debt Collection Guide

Small Business Debt Collection: A 7 Point Guide

This guide covers seven key points, ranging from understanding legal frameworks to negotiating payment plans. It equips small business owners with the knowledge and tools necessary to successfully pursue outstanding debts. 

Commercial Debt Collection Explained

What is Commercial Debt Collection?

Commercial debt collection is when a third-party agency recovers unpaid debts owed by one company to another. The recovery agency contacts the company owing the debt requiring it to pay the debt.

Commercial Debt Collection Challenges for US Companies

What Are Commercial Debt Collection Challenges for US Companies?

Commercial debt collection presents myriad challenges for US businesses, including complex jurisdictions and contractual elements.

How Much Debt Should a Business Have

How Much Debt Should a Business Have?

Striking the right balance between business debt and equity is paramount for maintaining financial health and sustaining growth.

Commercial Debt Collection Challenges and Solutions for Ukrainian Businesses

Commercial Debt Collection Challenges and Solutions for Ukrainian Businesses

In today's economic climate, Ukrainian companies encounter many obstacles when recovering commercial debts.

How is Bad Debt Defined in Business

How is Bad Debt Defined in Business: A Short Explanation

The term "bad debt" holds significant importance for businesses and can often signal trouble for enterprises of varying sizes.

What is a Creditor in Business

What is a Creditor in Business?

A creditor is a party that has provided goods, services, or monetary resources to a business on credit, expecting repayment within an agreed timeframe.

What is a Commercial Debt for Business

What is a Commercial Debt for Business?

Commercial debt is the amount of money one business entity owes to another for goods or services provided on credit terms.

What Should Businesses Expect From a Modern-Day Debt Recovery Agency

What Should Businesses Expect From a Modern-Day Debt Recovery Agency?

Modern debt recovery firms are redefining industry standards by offering strategic financial solutions alongside traditional collection efforts.

Expert Tips for Choosing Reliable B2B Partners

How to Safeguard Your Business: Expert Tips for Choosing Reliable B2B Partners and Clients

In today's rapidly evolving business landscape, establishing robust B2B partnerships and securing dependable clients are pivotal to achieving growth.

Commercial Debt Collection Challenges and Solutions for UK Companies

What Are Commercial Debt Collection Challenges and Solutions for UK Companies?

Navigating the complexities of commercial debt recovery in the UK presents many challenges that demand a strategic understanding and adept handling.

Debt Collection for AI Companies

A Comprehensive Guide to Commercial Debt Collection for AI Companies

As AI businesses often market their technology globally, cross-border trade is a notable challenge they face.

Commercial Debt Collection nuances for Recruitment Companies

How Does Commercial Debt Collection Work for Recruitment Companies?

As recruitment agencies strive to connect employers with suitable candidates, the issue of outstanding payments can become a common challenge for them.

Debt Collection Agencies

What are Debt Collection Agencies: Their Role in Financial Recovery

The debt collector is mainly an agency creditors hire to recover money owed by businesses that have failed to make timely payments on their debts.

Commercial Debt Collection Issues for IT and Software Development Companies

Commercial Debt Collection Issues for IT and Software Development Companies

The billing models, project timelines, and evolving client requirements create an environment where debt recovery becomes a complex and nuanced process for IT and Software development companies.

Maintaining Healthy B2B Relationships while Pursuing Debt Collection

Business Debt Collection Etiquette: How to Preserve B2B Relationships

In the ever-evolving landscape of business, maintaining positive relationships with other companies is crucial for long-term success. However, as businesses engage in commercial transactions, they may encounter instances where debtors are not forthcoming, acting in bad faith, or having a hidden agenda.

What is a Debtor

What is a Debtor in Business: Essential Guide

Commercial debtors, in essence, refer to entities that owe money to a business for goods or services provided. This financial relationship forms a critical component of the broader commercial ecosystem, shaping a business's cash flow dynamics and overall financial health. 

Global Debt Collection Explained

What is Global Debt Collection?

Global debt collection is when a collection agency or company actively tries to collect debts from debtors across international borders.

What to Do if a Company Owes You Money

What to Do if a Company Owes You Money: Resolving Unsettled Debts

In a business relationship, there might be situations where a company owes you money, and the path to resolution may not always be clear. When faced with this challenge, it's crucial to approach the situation with a level head and a strategic plan.

Top Challenges in Global Debt Collection

10 Global Debt Collection Challenges: How to Overcome Them

Identify the key challenges of global debt collection, from legal jurisdictions to assessing debtor's liquidity, and effective strategies for successful debt recovery.

Commercial Debt Collection Laws and Rules in the UK

Commercial Debt Collection Laws in the UK: A Comprehensive Guide

Understanding the legal framework governing commercial debt collection is paramount for both creditors seeking restitution and debtors aiming to protect their rights.

Corporate debt recovery

What is Corporate Recovery?

A Comprehensive Guide to Collecting £100k-£250k Unpaid Invoices from International Businesses

Two men handshaking over a satisfying debt settlement

How a Ukrainian company achieved a satisfying settlement

The Ukrainian company had done everything they needed...

Portuguese company's outstanding debt collection case study

How a Portuguese company got 80% of the outstanding debt collected

A recruitment company based in Portugal was owed money from clients in the UK, Portugal and Germany.

A software development company's outstanding debt negotiation

Indian software developer got that Payfor feeling

Payfor was able to collect the outstanding debt by negotiating a resolution between the two companies.

overcome frustrating debt collections

How we overcome frustrating debt collections

A Welsh SaaS business was owed money by a London financial services company.

Collect Debt From a Business That Repeatedly Refuses to Pay

How to Collect Debt From a Business That Repeatedly Refuses to Pay What They Owe

At the start of the Covid Pandemic in the UK early 2020, companies started owing each other money left, right and centre…

Payfor Commercial Debt Recovery Agency Logo

Your global 
recovery specialists.

Payfor's Google Ratings Image

Follow

Facebook white logoTwitter bird logoInstagram logo

Global Address

Number One, Vicarage Ln, London E15 4HF  

Copyright. Payfor 2024. London.