Statute barred debt

Statute barred debt
See also

Statute barred debt is a civil law institution where, after a certain period of time, a debtor may evade performance unless he waives the objection of limitation (D.E. Reid, 2016, p.1).

The statute barred debt is a category linked to the passage of time. It occurs in civil law, financial law, administrative law, criminal law and other branches of material law. The statute of limitations is based on the fact that a debtor, after the lapse of the time limit specified by the law, may evade the performance of the service for the institution of the statute barred debt, the justification is primarily the impact of the passage of time (negative) on evidence which is the basis for the existence of claims (D.E. Reid, 2016, p.2).

The category is time related, because after years of evidence cannot be even carried out due to e.g. death of witnesses, destruction or disappearance of documents, etc. The reason for this is the (negative) effect of the passage of time on the evidence which is the basis for the existence of claims. It is also important that the statute barred debt has a mobilising effect on the creditor - he is urged to pursue his claims very quickly (D.E. Reid, 2016, p.2-5).

The debt is time-barred after the time specified by law. The general limitation period for debts is currently 6 years. This period has been shortened from 10 years. However, if the consumer has a debt with the trader, the statute of limitations has not changed and is usually 3 years. In such a period (3 years), the debt on account of the debt becomes statute-barred(O.C. Medobi, Ch. Wigwe, 2017, pp.406-409)  :

  • credit agreements;
  • loan agreements;
  • rent;
  • Internet and telephone charges.
  • The shorter, because only 1-year limitation period applies to journeys without a valid ticket in mass transport.

On the other hand, the 2-year limitation period applies to bank account debt, the so-called debit on account (O.C. Medobi, Ch. Wigwe, 2017, pp.406-409) .

The issue of statute barred debt

The legal regulation of the statute barred debt is contained in Title VI of the first book of the Polish Civil Code. Apart from the statute of limitations in civil law, there are also other institutions related to the passage of time (M. C. McAllister 2017, p. 12-16):

  • silence
  • convictions
  • deadlines

The effect of the statute barred debt is uniform for all legal entities, i.e. the person against whom the claim is asserted may make a charge of statute of limitations and thus oblige the court to determine whether the statute barred debt is material (M. C. McAllister 2017, p. 12-16). Thus, the use of the statute of limitations depends solely on the debtor (the court does not examine the statute of limitations ex officio). However, if statute barred debt is not filed, the court examines the case as to its substance. The debtor may be dependent on the court ruling on the dispute and, possibly, releasing the debtor from the charge of evading payment of debts when, for example, the performance was actually fulfilled (M. C. McAllister 2017, p. 12-16).

Hence, the voluntary performance of a benefit resulting from such an obligation cannot justify a claim for its reimbursement. The benefit is due because the statute of limitations cannot cause the obligation relationship to expire a claim which is pronounced by a final court decision or an agreement concluded before the court also becomes statute-barred, however, in such a case the statute barred debt always amounts to 10 years for such claims (M. C. McAllister 2017, p. 12-16). If we are dealing with periodical claims, tort claims, etc., i.e. those for which the provisions of the Civil Code provide for a shorter period of time before a judgment is given, and so the period will be 10 years (O.C. Medobi, Ch. Wigwe, 2017, pp.406-409) .

Functions of the statute barred debt

The social function is mainly to eliminate uncertainty and harmful tensions caused by the discrepancy between the facts and the law. The debtor should not be in a continuous state of danger that the creditor may at any time make his claims known (N. Martin T.E. Goldsmith, 2010, p. 23-25).

Enforcement of claims after a long time has elapsed would face many serious evidentiary difficulties, sometimes insurmountable. It can be assumed that the person entitled will not be interested in the benefits if he has not claimed them for a long time (N. Martin T.E. Goldsmith, 2010, p. 23-25).

Limitation periods for statute barred debt

Limitation periods shall be determined by mandatory legal rules. Accordingly, they may not be extended or shortened by the parties. The following periods of limitation may be specified in the law(O.C. Medobi, Ch. Wigwe, 2017, pp.406-409):

  • 10 years - this is an essential limitation period if the special rules do not provide for a shorter limitation period in some cases,
  • 3 years - such term applies to claims for periodic benefits (e.g. payment of alimony or rent), claims under the employment relationship, claims related to running a business (regardless of the type of benefits), claims for compensation for damage caused by a tort (excluding damage caused by a crime, then the statute of limitations is 10 years),
  • 3 years and 10 years - this is the situation when one of the parties is a non-professional and the other is a business entity (the condition is that the claims do not apply to periodic benefits). In such a case, the statute of limitations will be different for each of the parties - for a business entity it will be 3 years, and for a non-professional these claims will expire after 10 years,
  • 2 years - we apply to claims for services provided by catering and hotel companies,
  • 1 year - after the expiry of such period, e.g. claims arising from the contract of carriage, warehouse and forwarding become statute-barred (O.C. Medobi, Ch. Wigwe, 2017, pp.406-409).

Course of statute barred debt

The period of limitation generally begins from the date when the claim becomes due (such a date is, for example, the date on which the loan is repaid; it will not be the date on which the loan is granted). The debtor has the right to waive the objection of the statute of limitations, but cannot exercise such a right before the expiry of the statute of limitations (J. Fox, 2012, p. 355).

Suspension shall temporarily halt the running of the limitation period, but when the circumstances which caused the suspension cease to exist, the limitation period shall continue to run and the new period shall count towards the previous period. The limitation period provided for in the legislation may therefore consist of a number of shorter periods, separated by suspension periods (J. Fox, 2012, p. 355). The limitation period does not begin and is suspended (R. Cordray 2016, p. 67-68):

  • As for the claims of children against parents - for the duration of parental authority,
  • As for the claims of persons who do not have full legal capacity against their guardians and guardians, for the duration of their guardianship and guardianship,
  • As regards the claims of one spouse against another, for the duration of the marriage,
  • For all claims where, for reasons of force majeure, the person entitled cannot pursue such claims before a court or other authority competent to hear and determine cases of a particular kind, for the duration of the impediment (R. Cordray 2016, p. 67-68).

The interruption of the limitation period shall have effects going well beyond the suspension. The period of limitation after interruption shall begin to run from the outset. The entire period which has elapsed since the interruption cannot be included in it (R. Cordray 2016, p. 67-68). The interruption of the limitation period causes:

  • Any action taken before a court or other competent authority in order to enforce a claim. Such actions include, first of all, filing a statement of claim and filing a motion to initiate enforcement proceedings,
  • Recognition of the claim by the debtor (R. Cordray 2016, p. 67-68).

References

Author: Marzena Rusin