When do debts become statute-barred?

What is prescription of debts?

Prescription of debts means that a creditor loses the right to demand payment from a debtor after a certain period of time. The limitation period begins to run from the day the debt falls due for payment and is regulated in Sweden by the Prescription Act (1981:130). The general limitation period is ten years, but it can vary depending on the type of debt.

Different prescription times

The statute of limitations for various types of debt in Sweden is as follows:

• General debts: Ten years, for example for ordinary loans and invoice debts.
• Consumer debts: Three years, which applies to debts incurred in connection with consumer claims.
• Debts to the state: Five years, for example for tax debts, with the possibility of extension.
• Maintenance debts: Five years, for example for debts related to maintenance support.

What happens when a debt is statute-barred?

When a debt is time-barred, the creditor loses the right to demand payment. The debtor is then no longer legally obliged to pay the debt, and the creditor cannot collect the debt through legal action. However, it is important that the debtor actively challenges the statute of limitations if the creditor still tries to demand payment.

How is prescription prevented?

To prevent a debt from becoming time-barred, the creditor can take measures that interrupt the statute of limitations and start a new statute of limitations. Examples of such measures are:

• Reminders: A written reminder about the debt can start a new limitation period.
• Demand for payment: A formal demand for payment, such as a debt collection claim, interrupts the statute of limitations.

Important exceptions

Some debts have no limitation period or a longer limitation period, for example debts arising from crimes or agreements with special conditions.

How does statute of limitations affect your credit score?

Even if a debt is time-barred, it can still affect your credit score if it has been reported to credit bureaus. It is therefore important to deal with debts in time to avoid negative consequences for your financial future.

Conclusion

Understanding statutes of limitations is critical for both creditors and debtors. By taking the right steps in time, creditors can prevent statute of limitations, and debtors can protect themselves against old debts. It is important to know your rights and obligations to avoid unpleasant surprises in the future.