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When does debt become obsolete?

What is limitation?

The limitation of financial obligations means that the time allowed for claiming damages in court proceedings has expired. This does not mean, however, that the debt was canceled. The provisions of our law are designed so that the creditor can claim repayment of obligations virtually indefinitely, if he actually tries to recover money. Limitation of debt does not mean its redemption. In the event that the creditor decides to cancel the debt, the debtor is free from any repayment, i.e. the creditor no longer has any right to demand from the debtor and his / her repayment in the future.

On May 28, 2018, a change was signed by the President of the Republic of Poland, proposed yet in the previous year by the Ministry of Justice; the change passed through the Sejm and the Senate in an unchanged form in January and April 2018, respectively. It concerned the amendment of the Civil Code and the Code of Civil Procedure, the Act on enforcement proceedings in administration, and the Act on Providing Economic Information. The amendment came into force on July 9, 2018.

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What does this mean for the average?

The most important changes that the amendment introduces are bold and bold, not to say revolutionary. They will make life easier for the ordinary citizen and the debtor, while the more difficult times are waiting for the creditors. The main changes and assumptions of the amendment are:

  • the new general limitation period is 6 years instead of the previous 10 years,
  • change in the method of calculating the expiration of the limitation period – from now on it is the last day of the calendar year (for example, if the annual commitment started on May 12, 2018, according to the regulations, it expires on December 31, 2019),
  • the courts will have to investigate whether the indebtedness has expired – the debtor has so far had to prove in the court that the debt is expired,
  • the money seized on the bank account will not be credited to the enforcement authority within seven days – the debtor has time to clarify the case (he had not had that time) – he will now be able to bring an action for deprivation of enforceability.

How long does it take for the debt to expire?

How long does it take for the debt to expire?

The Act provides for two basic limitation periods for debts:

  • 3 years for claims arising from business activities and periodic claims,
  • 6 years for all property claims and claims confirmed by a valid court judgment.

Other, shorter periods for selected types of debts have also been introduced:

  • 1 year – fines and liabilities resulting from the contract of carriage, and liabilities arising from preliminary sales contracts (such debts are best repaid immediately and do not forget about them, because during the course of the years they can grow several times, for example by pursuit by the debt collection company Municipal Transport in Warsaw, where cases reached even 17 years back),
  • 2 years – claims arising from a bank account agreement (usually debits in the account, the deadline runs from the date on which it was due to be repaid), telecommunications services (telephone, internet, television), entrepreneur’s claims due to an invoice not paid by the customer, claims under the contract sales, claims of the supplier for the delivery, claims for the work contract (from the date of completion of the work),
  • 3 years – all receivables due to conducting business activity, due to contractual penalties provided for in the contract between contractors, unreturned or unpaid bail, advance payment or prepayment, all employee claims against the employer under the employment contract (from the date on which the employer was obliged) pay remuneration), claims under insurance contracts, liabilities under a loan or loan agreement (from the date on which their repayment obligation arose), rent debt, outstanding credit card debt, tax liabilities arising from service by the tax office decisions with the amount of tax, counting from the end of the calendar year in which the tax obligation occurred (eg real estate tax),
  • 5 years – tax liabilities resulting from the law (eg personal income tax, VAT, tax on civil law transactions), counting from the end of the calendar year in which such an obligation occurred,
  • 6 years – inheritance debts, unless the creditor takes any action to enforce them.

Can you, and how can you recover your expired debt?

It is clear from the regulations that the expiration of a debt leads to its expiry – unless the debtor before the court raises the plea of ‚Äč‚Äčlimitation. Creditors should therefore scrupulously monitor these deadlines. The only way to avoid the statute of limitations is to interrupt his run. The methods are all actions performed before the court, initiating mediation with the debtor, or acknowledging claims by the debtor. They make the limitation period count from the beginning. If the creditor does not do so, the demand for repayment may be impossible.

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