You’re in a lot of financial trouble and all you’re hoping for is the statute of limitations on your debt, so you can finally sleep soundly. Sometimes, on the other hand, you don’t even know or don’t remember about some debt, for example, from an unpaid fine, no one reminds you to pay, and so another year passes. Regardless of the situation, the term debt statute of limitations exists, but is misread by many. So let’s check out what exactly it is and what the statute of limitations on a debt is.
The concept of debt statute of limitations
The statute of limitations on a debt, or in other words the statute of limitations on a claim, is regulated by the Civil Code in Article 117 § 2, stating that after the expiration of the statute of limitations, the one against whom the claim is due may evade its satisfaction, unless he waives the exercise of the plea of limitation. However, waiving the plea before the expiration of the statute of limitations is impossible. It should also be remembered that the statute of limitations varies depending on the type of debt.
So it would seem that after the expiration of the time limit indicated in the Code, the debtor can be at ease, but in fact this is not the case at all. The fact that there is a concept of the statute of limitations on a debt does not mean that the time-barred debt does not have to be paid and the debtor can count on the cancellation of debt collection. This is because the debt exists all the time. So what is the purpose of introducing such terminology? Well, the purpose of the statute of limitations is to prevent a situation in which a creditor does not make any claims for repayment of a debt for many years, and then, after several or even several decades, suddenly demands repayment of the debt with massive interest. Thus, the law indicates a specific period during which the creditor can insist on repayment of the debt owed. When a debt enforcement case goes to court, it automatically checks whether the debt is time-barred. Note also that there are some exceptions in which the court orders the repayment of a debt despite the statute of limitations, but these are rare cases.
When is the debt time-barred?
The statute of limitations for a debt is not uniform and, as we mentioned earlier, depends on the type of debt. Nevertheless, the law gives two basic statutes of limitation and these are- 3 years for business claims and periodic benefits; 6 years- for all property claims or claims established by a final court judgment. Below we will present examples of the statute of limitations, taking into account the most common types of debts:
- 1 year- fines, claims for services with the Postal Service;
- 2 years-claims relating to telecommunications services; claims under a contract for work and a contract of sale; bank account debit cases;
- 3 years- fines issued by the Police; claims on employment contracts; claims on insurance contract; bank claims, including unpaid credit card, loan installment, loan; claims on rent;
- 6 years- inheritance debt; claims established by a final court judgment.
Also important are the statutes of limitation on tax liability, and so:
- 3 years- obligations arising as a result of the delivery of a decision by the tax office with the amount of tax, such as on real estate, with the period calculated from the end of the calendar year in which the tax obligation arose;
- 5 years-liabilities arising by operation of law, e.g. VAT, income tax, tax on civil law transactions, with the period calculated from the end of the calendar year in which the deadline for payment of this tax expired.
How to count the running of the statute of limitations?
Many people mistakenly believe that a debt is automatically time-barred when a certain number of years have passed since the debt was incurred. This is because any interference by the creditor to recover his debts interrupts the accrual of the period and makes the time count anew from the beginning. Thus, in reality, it is extremely rare for a debt to become time-barred.
The introduction of a provision relating to the statute of limitations on a debt is therefore primarily intended to systematize the creditor’s actions and protect the debtor, in case of a possible delay in time. The debt collection company should therefore take action to recover the debt as soon as possible, so there is a better chance of success in its endeavors.