Expiration of debt

The general expiration limit of debt is 3 years

Debts under private law that companies collect from consumers based on granting a loan or purchasing goods or services are consumer receivables.

• As a rule, a debt expires three years from the due date or date of delivery
• The expiration period of debt is five years if a final court order has been issued on it, or there are other grounds for enforcement that can be implemented similarly to a final court decision.

The expiration of a debt can be interrupted

As a rule, the expiration of a debt can be interrupted. When the expiration of the debt has been interrupted, a new expiration period of the same length starts running, which can also be interrupted.

For example, the expiration of a debt is interrupted when

• the parties agree on payment arrangements, collateral or other change in the terms and conditions of the debt, or on the interruption of expiration
• the debtor pays the debt or otherwise acknowledges the debt to the creditor
• the creditor demands payment or otherwise reminds the debtor of the debt
• the creditor takes the debtor to court to collect the debt or lodges their claim in debt restructuring or bankruptcy proceedings
• the creditor applies for debt enforcement by legal action.

Final expiration of a debt

The final expiration of a debt only applies to private individuals’ monetary debts which expire finally

• 20 years after the debt is due if the creditor is a company or an organisation
• 25 years after the debt is due if the creditor is a private individual.
• 15 years after the enforcement basis was given i.e. court verdict
• 20 years after a court decision (enforcement decision) was given if the creditor referred to in the decision is a private individual
• 20 years after a court decision (enforcement decision) was given if the claim for compensation is based on an offence for which the debtor has been sentenced to imprisonment or community service.

Under a provision that entered into force at the beginning of 2015, the expiration period of a debt based on the due date is partly calculated retroactively; when the Act entered into force on 1 January 2015, at most 15 years of an expiration period had passed. This means that after the Act entered into force on 1 January 2015, a creditor could still collect their receivables for a further 5 or 10 years, depending on the debt’s expiration period; for example, a consumer receivable that was due on 31 December 1999 with an expiration period of 20 years finally expired on 1 January 2020, or a consumer receivable due on 30 June 2005 will finally expire on 30 June 2025.

Debts owed to public corporations expire in five years as a rule

A large number of debts owed to public corporations are directly enforceable. This means that the creditor does not have to apply to the District Court for a separate enforcement basis.

For example, these directly enforceable debts include

• hospital fees owed to a municipality
• day-care fees and other social and health care client fees
• parking fines.

Debts of this type that are collected by public corporations

• Mainly expire finally in five years.
• The expiration period cannot be interrupted.
• The expiration period is calculated from the end of the year in which the debt arose

Consequences of debt expiration

When a debt expires:

• The debtor no longer has an obligation to repay the debt. Also, if the debt has expired, the creditor cannot demand that you pay any debt collection costs related to recovering the debt in question.
• In consumer receivables, including loans and invoices for goods, the debtor has the right to receive a refund for a payment they made without knowing that the debt has expired. The consumer has the right to receive overdue interest on the amount to be refunded.
• Even if the debt has expired, the creditor can still receive a payment from the debtor’s collateral assets to which the creditor has the right of pledge or distraint.
• Even if the debt has expired, the creditor can recover their receivables from property distrained before the expiration, for example sale by court order.

A court will not examine the expiration of a debt on its own initiative (as part of its official duties). It will only do so based on a claim made by an interested party. You must yourself appeal to the expiration of the debt before the court.

You have the right to receive information about your debts

You have the right to ask the creditor to give you up-to-date information about the total amount of your debts and their grounds free of charge. You have the right to ask the creditor once a year itemisation of your unpaid debts and their instalments free of charge, as well as a report on how the interests and charges are calculated.

This information provided by the creditor must also include information on the possible expiration of the debts or interruption of the expiration period, and any enforcement decisions, including dates related to debt recovery proceedings.

The financial and debt counselling services can help you assess your debt situation. These services are free for the customer.