Statute Barred Debt in Scotland: The 5-Year Prescription Rule Explained

In Scotland, most consumer debts are subject to a 5-year time limit known as the "short negative prescription." This rule is fundamentally different from the equivalent system in England and Wales, where a 6-year limitation period applies. The distinction is not merely one of duration. In Scotland, once the 5-year period expires without interruption, the debt is extinguished entirely — it ceases to exist as a matter of law. This is a substantive extinction of the obligation, not simply a procedural bar preventing the creditor from taking court action.

The legal framework for this rule is the Prescription and Limitation (Scotland) Act 1973, as amended by the Prescription (Scotland) Act 2018. The 2018 Act was commenced in stages — some key provisions (notably the knowledge test changes and the standstill agreement provision) came into force on 1 June 2022, with most remaining provisions commencing on 28 February 2025. The 2018 Act introduced a number of significant changes, including new provisions on the burden of proof and restrictions on contracting out of the prescriptive period.

Although consumer guidance commonly uses the phrase "statute barred" to describe debts that have passed the prescriptive period, the correct legal terminology in Scots law is "prescribed." This article uses both terms for clarity.

In Scotland, if a creditor has not made a relevant claim (such as raising court proceedings) and the debtor has not relevantly acknowledged the debt for a continuous period of 5 years from the date the debt became enforceable, the obligation is extinguished. The debt no longer exists. This applies to most common consumer debts including credit cards, personal loans, store cards, hire purchase agreements, rent arrears, utility bills, and contractual obligations.

The 5-year clock can be interrupted — and started again from the beginning — if the creditor makes a relevant claim or if the debtor relevantly acknowledges the debt during that period.

This rule applies only in Scotland. England and Wales operate under a separate 6-year limitation framework.

The 5-year negative prescription is established by Section 6(1) of the Prescription and Limitation (Scotland) Act 1973. The mechanism operates as follows.

1. The prescriptive period begins on what the legislation calls the "appropriate date." For most consumer debts, this is the date on which the obligation became enforceable — typically, the date the debt fell due for payment. For obligations listed in Schedule 2 of the 1973 Act, the appropriate date is as specified in that Schedule.
2. Once the appropriate date is established, a continuous 5-year period begins. During this window, the creditor must either make a "relevant claim" or obtain a "relevant acknowledgment" from the debtor to prevent the debt from prescribing.
3. If neither occurs during the full 5 years, the obligation is extinguished by operation of law at the expiry of that period.
4. It is important to understand that extinction is automatic. No application to a court is needed. The debt simply ceases to exist once the 5-year period passes without interruption.

For instalment debts, such as loan repayments or hire purchase agreements, each instalment may have its own appropriate date depending on the wording of the contract.

The 5-Year Period

The standard prescriptive period for most consumer and commercial debts is 5 years. This covers credit cards, personal loans, store cards, hire purchase agreements, rent arrears, utility bills, mortgage interest, contractual obligations, and damages claims. The period runs continuously from the appropriate date unless interrupted.

The 20-Year Long-Stop Period

Certain obligations are subject to a longer prescriptive period of 20 years rather than 5 years. The 20-year period applies to obligations not covered by the 5-year rule, debts constituted by a court decree, Summary Warrant, or tribunal order, and certain other statutory obligations. Following the 2018 Act amendments, the 20-year period cannot be interrupted by relevant claims or acknowledgments — it functions as a true long-stop. Where a claim has been made before the 20-year period expires, the period is extended only to allow that in-progress claim to reach final disposal; it does not restart the full 20-year period. Following the 2018 Act reforms, Council Tax and non-domestic rates (business rates) are now generally brought within the scope of the 5-year prescription as statutory payment obligations, subject to specific exclusions.

The 2-Year Period

A separate 2-year prescriptive period applies to obligations to make a contribution between wrongdoers under the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940.

Extension by Agreement

It is possible for the creditor and debtor to agree in writing to extend the prescriptive period. However, such an extension is limited to a maximum of one year, only one extension is permitted per obligation, and the agreement must be made after the prescriptive period has begun but before it would otherwise expire. The agreement binds only the parties to it. Any broader attempt to contract out of or alter the prescriptive period — beyond what Section 13 of the 1973 Act permits — is void.

What Counts as a "Relevant Claim"

A relevant claim, as defined in Section 9 of the 1973 Act, is a claim made by or on behalf of the creditor for performance (or part-performance) of the obligation. Relevant claims include:

• Court proceedings.
• A petition for sequestration or a claim in bankruptcy.
• A claim submitted under a trust deed.
• A winding-up petition or a claim in liquidation.
• The appointment of a receiver.
• An application for or appointment of an administrator or a claim submitted in an administration (under the Insolvency Act 1986).
• The execution of diligence.

A relevant claim is treated as having been made continuously from the date it is raised until it is finally disposed of.

What Counts as a "Relevant Acknowledgment"

A relevant acknowledgment, as defined in Section 10 of the 1973 Act, takes one of two forms.

1. Performance by or on behalf of the debtor towards fulfilment of the obligation, where that performance clearly indicates the obligation still subsists.
2. An unequivocal written admission by or on behalf of the debtor acknowledging that the obligation still subsists.

Where a debt is owed jointly by more than one person, a written acknowledgment binds only the person who made it. The effect of performance (such as making a payment) on co-obligants is more nuanced — Section 10 of the 1973 Act contains specific provisions governing different categories of co-obligant, and the position may vary depending on the nature of the joint obligation.

A critical point: once a debt has prescribed, it cannot be revived by any subsequent acknowledgment or payment.

The Appropriate Date

For obligations specified in Schedule 2 of the 1973 Act, the appropriate date is as set out in that Schedule. For all other obligations, it is the date when the obligation became enforceable. In practice, for most contractual debts, this means the date the payment fell due. Where an obligation arises from a series of transactions charged on a continuing account — such as an ongoing professional services relationship — the appropriate date is the date when payment for the last services rendered became due. This can significantly extend the prescriptive period for ongoing commercial relationships.

Burden of Proof

Section 13A — a new section inserted into the 1973 Act by the 2018 Act — provides that where a question arises as to whether an obligation has been extinguished by prescription, the obligation is presumed to be extinguished unless the creditor proves otherwise. The burden of proof rests with the creditor.

• "Statute barred" versus "prescribed." Consumer guidance materials often refer to debts as "statute barred." In Scots law, the technically correct term is "prescribed." Both terms refer to the same outcome — the expiry of the relevant time period — but "prescribed" carries the additional meaning that the debt has been extinguished entirely, not merely rendered unenforceable.
• Scotland versus England and Wales. The Scottish system operates differently from the limitation rules in England and Wales. In England and Wales, a 6-year limitation period applies to most debts, after which the debt becomes unenforceable but does not cease to exist. In Scotland, the 5-year period results in the obligation being extinguished completely. These are distinct legal systems and one should not be confused with the other.
• Acknowledgment restarting the clock. Any relevant acknowledgment — whether by making a payment or providing a written admission that the debt exists — will interrupt the prescriptive period and cause it to begin again from scratch. However, this only applies while the prescriptive period is still running. Once the 5 years have elapsed without interruption and the debt has prescribed, no subsequent acknowledgment or payment can revive it.
• Council Tax. Following the 2018 Act reforms, Council Tax and non-domestic rates in Scotland are now generally brought within the scope of the 5-year prescription as statutory payment obligations, subject to specific exclusions. However, where a Summary Warrant has been obtained, the resulting debt is constituted by that warrant and may be subject to the 20-year period.
• Court decrees and Summary Warrants. Where a debt has been established by a court decree, Summary Warrant, or tribunal order, the 20-year prescriptive period applies rather than the 5-year period.

• Bills of exchange and promissory notes. The 5-year prescriptive period applies to obligations arising from bills of exchange and promissory notes. However, unlike standard debts, acknowledgment by the debtor is irrelevant for these instruments — the clock cannot be reset through acknowledgment.
• Fraud or error induced by the debtor. If the creditor's failure to make a claim during the prescriptive period was caused by the debtor's fraud, or by error induced by the debtor, the time during which the creditor was so affected is not counted as part of the prescriptive period. Following the 2018 Act amendments, it is irrelevant whether the debtor intended to cause the creditor to fail to make a claim. However, any time after the creditor could, with reasonable diligence, have discovered the fraud or error is counted normally.
• Legal disability of the creditor. If the original creditor is under a legal disability — specifically nonage (being under the age of legal capacity) or unsoundness of mind — the period of that disability is not reckoned as part of the prescriptive period. This protection applies only to the original creditor and only while they remain the creditor.
• Other statutory time limits. Where another statute expressly provides a different limitation or prescription period for a particular obligation, or makes an obligation imprescriptible, that statutory provision takes precedence over the 5-year and 20-year periods in the 1973 Act.
• Continuing accounts. Where an obligation arises from a series of transactions charged on a continuing account (such as professional services rendered over time), the appropriate date is the date when payment for the last services rendered became due. This can have the effect of significantly extending the period before prescription begins to run.

FCA Rules on Statute Barred Debts in Scotland

The Financial Conduct Authority's Consumer Credit Sourcebook (CONC 7.15) sets out specific rules and guidance for firms collecting debts that may be statute barred, including debts subject to prescription in Scotland. The key provisions are:

• It is misleading for a firm to suggest that court action is possible when the firm knows or ought to know that the limitation or prescriptive period has expired.
• A firm must not continue to demand payment from a customer after the customer states that they will not pay because the debt is statute barred.

The 2018 Act Changes

The Prescription (Scotland) Act 2018 was commenced in stages — some key provisions took effect on 1 June 2022, with most remaining provisions commencing on 28 February 2025. The changes introduced include:

• A new discoverability test for latent damage claims.
• Clarification that the 20-year period functions as a true long-stop (extended only to allow in-progress claims to reach final disposal, rather than restarting).
• A new provision placing the burden of proof on the creditor to show prescription has not run.
• Restrictions on contracting out of the prescriptive framework.

Joint Debts

Where a debt is owed jointly, the rules on acknowledgment apply differently depending on its form. A written acknowledgment binds only the person who made it — not any co-obligant. The effect of performance (such as making a payment) on other co-obligants is governed by specific provisions in Section 10 of the 1973 Act and may vary depending on the nature of the joint obligation. The position is more nuanced than a single general rule can capture.

• 5-Year Rule: In Scotland, most debts are extinguished entirely after 5 years without acknowledgment or claim.
• England/Wales Different: This is completely different to the 6-year rule south of the border (where debt still technically exists).
• Extinguished: "Prescribed" means the debt is gone forever. It cannot be revived by paying later.
• Interruption: If you pay or acknowledge in writing during the 5 years, the clock restarts.
• Court Decrees: If a court decree (CCJ equivalent) or Summary Warrant already exists, it's 20 years, not 5.
• Burden of Proof: The creditor must prove the debt still exists (Section 13A).