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A logbook loan lets a borrower raise money against a vehicle they already own outright, while keeping the vehicle and continuing to drive it. Unlike a standard unsecured cash advance, it works through a legal document called a bill of sale, governed by the Bills of Sale Act 1878 and the Bills of Sale Act (1878) Amendment Act 1882, both still in force in England and Wales.

How the security actually works

Ownership of the vehicle is transferred to the lender for the duration of the agreement under the bill of sale, even though the borrower keeps possession and continues using the vehicle day to day. This is different from taking out an unsecured cash advance or personal loan, where the lender has no direct claim over any specific asset if repayments are missed. Because the lender holds legal title, a logbook loan gives it a more direct route to recovering the debt than an unsecured lender has.

The five situations that allow seizure

Section 7 of the 1882 Act limits when the lender, described in the Act as the grantee, can seize the vehicle. Seizure is only permitted where the borrower defaults on paying the sum secured or breaks a covenant necessary for maintaining the security; becomes insolvent or allows the goods to be distrained or taken under Schedule 12 to the Tribunals, Courts and Enforcement Act 2007; fraudulently removes or allows removal of the goods; fails, without reasonable excuse, to produce rent, rates and tax receipts on written demand; or has a court judgment enforced against their goods by execution. A lender cannot seize the vehicle simply because it decides to; one of these five statutory triggers has to apply.

The five-day rule after seizure

Section 7 also gives the borrower a specific right after seizure takes place. Within five days of the seizure, the borrower can apply to the High Court or a judge in chambers, and if the court finds that the reason for seizure no longer applies, for example because the debt has since been paid, it can prohibit the vehicle’s removal or sale, or make another appropriate order. This means seizure is not necessarily the end of the matter: a borrower who can show the underlying default has been cured has a short but real window to stop a sale going ahead.

Where consumer credit protection also applies

Many logbook loans are also regulated credit agreements in their own right, meaning the lender needs FCA authorisation and the agreement is subject to the same conduct rules that apply to other forms of regulated credit, including rules on affordability assessment, arrears handling and financial promotions covered elsewhere on this site. A logbook loan borrower in arrears should expect the same kind of formal notices, such as a default notice, that any other regulated credit agreement requires before further enforcement action, in addition to the specific bill of sale procedure under the 1882 Act.

Registering the bill of sale

A bill of sale has to be registered, and the 1878 and 1882 Acts set out formal requirements for how it must be drawn up and executed. A bill of sale that does not meet the Acts’ formal requirements can be void, which is one reason borrowers considering this type of loan are usually advised to check the paperwork carefully, or get independent advice, before signing, since the vehicle itself is what is ultimately at risk if things go wrong.

Practical points before taking one out

Because the vehicle is put up as security, missing payments carries a different consequence than with unsecured borrowing: the risk is not just a mark on a credit file but potential loss of the vehicle through the seizure process described above. A borrower relying on the vehicle for work or caring responsibilities should weigh that risk specifically, not just the interest rate, against the alternatives, including the unsecured options and debt advice routes covered elsewhere on this site.

FAQs

Does a logbook loan lender need a court order before seizing the vehicle?

No. The 1882 Act allows seizure once one of the five statutory grounds applies, without a prior court order, though the borrower can apply to court within five days of seizure to challenge it.

Can a lender seize the vehicle for any reason it likes?

No. Section 7 limits seizure to five specific circumstances, including default on payment, insolvency, fraudulent removal of the goods, failing to produce certain receipts on demand, or a court judgment being enforced against the borrower’s goods.

What can a borrower do once the vehicle has been seized?

Apply to the High Court or a judge in chambers within five days of the seizure; if the court agrees the ground for seizure no longer applies, it can stop the vehicle being removed or sold.

Is a logbook loan the same as an unsecured cash advance?

No. A logbook loan is secured against a specific vehicle through a bill of sale, giving the lender a direct legal claim over that asset that an unsecured lender does not have.

Bottom line

A logbook loan puts a borrower’s own vehicle up as security through a bill of sale under Victorian legislation still in force today, and the lender can only seize the vehicle in one of five defined situations, with a five-day window afterwards to apply to court. This article is general information, not legal or financial advice on a specific agreement; a solicitor or a free debt adviser can review the paperwork and the borrower’s options before or after signing.

Sources

• legislation.gov.uk, “Bills of Sale Act (1878) Amendment Act 1882, section 7: As to seizure”
• legislation.gov.uk, “Bills of Sale Act 1878”

Scotland runs its own debt solutions, so the routes used in England and Wales do not apply to borrowers living there. The Scottish Government’s mygov.scot service describes three formal options: the Debt Arrangement Scheme, trust deeds and bankruptcy. This guide covers Scotland only.

Temporary relief and where to start

mygov.scot says that anyone considering a trust deed, bankruptcy or another debt solution may be able to apply for a moratorium, which is temporary relief from creditors lasting 6 months. It stops actions such as arresting wages, taking possessions and starting new court action. The Scottish Government funds free debt advice, and bankruptcy and the Debt Arrangement Scheme both have to be arranged through an approved money adviser.

The Debt Arrangement Scheme

The Debt Arrangement Scheme (DAS) lets a person repay debts at a rate they can afford, through a debt payment programme, and is run by Accountant in Bankruptcy (AiB), part of the Scottish Government. It is only available in Scotland and applications go through a DAS-approved money adviser, since not every adviser is approved. The programme can run for longer than the original credit agreements.

The repayment level depends on disposable income, which the adviser works out using the Common Financial Tool, the same tool used for every debt solution. Couples with debts can apply jointly. Once the money adviser or AiB formally asks creditors to agree, creditors cannot ask for money, take the person to court, apply to make them bankrupt or add interest, fees or charges. mygov.scot says a debt management plan run by a company does not give the same protection.

Protected trust deeds

A trust deed is a legally binding agreement to pay all or some of what is owed, and is aimed at unsecured debts such as credit card debt and personal loans. Only a licensed insolvency practitioner can arrange one and acts as trustee, using the Common Financial Tool to work out affordable payments. The proposal goes to creditors, who have 5 weeks to reply, and then to AiB.

A trust deed is protected only once AiB has approved it, and it cannot be agreed if more than half of creditors object or if creditors owed one third or more of the debt object. Once protected, creditors cannot contact the person directly, chase payments, add interest or charges or take court action. If it is not protected, creditors can still act and can ask the court to make the person bankrupt. Debts are written off at the end only if the deed is protected. Payments usually run for 4 years.

What advisers and trustees ask for

mygov.scot says a trustee arranging a trust deed will want copies of bank statements, pay slips, benefit award letters and household bills, plus a full list of creditors and the amounts owed, and will ask about assets, particularly property or a car. In a marital household, details of full household income are requested. A trustee may refuse to discharge a person from a trust deed where the agreed terms have not been kept, for example where not all payments were made.

For bankruptcy, mygov.scot defines assets as things owned over the value of £1,000, such as property, cars and jewellery, and disposable income as money left after essential living costs such as rent or mortgage, food and utility bills. A bankrupt person must tell the trustee about changes in circumstances and follow the bankruptcy rules.

Bankruptcy in Scotland

Bankruptcy, also called sequestration, is applied for through an approved money adviser or insolvency practitioner and cannot be applied for directly. On 21 September 2026 mygov.scot gave the application cost as £150, with some people not needing to pay a fee. AiB decides whether to grant it, assets can be used to repay debts, and a trustee manages the case. Details appear on the Register of Insolvencies.

There are two types. The Minimal Asset Process suits people with few assets, no disposable income and debts under £25,000, and discharge comes after 6 months. Full Administration applies to those who do not qualify, usually because they have assets or disposable income, and requires debts of at least £3,000. In full administration, discharge normally follows after one year, although payments towards debts usually run for 4 years and the full process can last longer.

FAQs

Can a person apply for Scottish bankruptcy directly?

No. mygov.scot says an approved money adviser or licensed insolvency practitioner must make the application.

Do creditors have to stop contacting a person in a DAS programme?

mygov.scot says protection begins when the money adviser or AiB formally asks creditors to agree to the programme.

Are debts always written off in a trust deed?

Only if the trust deed is protected; otherwise creditors can still take action.

Bottom line

Scotland offers three formal routes, each arranged through advisers and overseen by Accountant in Bankruptcy or a licensed practitioner: the Debt Arrangement Scheme for full repayment on affordable terms, a protected trust deed usually lasting 4 years, and bankruptcy with discharge after 6 months or one year. This is general information, not financial or legal advice; free debt advice funded by the Scottish Government should be used first.

Sources

• mygov.scot, “Debt solutions”
• mygov.scot, “Debt Arrangement Scheme (DAS) guide”
• mygov.scot, “Trust deeds: what is a trust deed”
• mygov.scot, “Trust deeds: how to get a trust deed”
• mygov.scot, “Bankruptcy guide”
• mygov.scot, “How to go bankrupt: step by step”

A time order is a court order under section 129 of the Consumer Credit Act 1974 that can give a borrower in difficulty more time or smaller instalments on a regulated agreement. The provision is marked as applying across the United Kingdom, but the court steps described here relate to England and Wales, and Scotland has an alternative that is covered below.

Default notices come first

Section 87 says that before a creditor can terminate a regulated agreement for breach, demand earlier payment, recover goods or land, treat the borrower’s rights as ended or restricted, or enforce security, it must serve a default notice under section 88. Section 88 requires the notice to be in the prescribed form and to specify the nature of the alleged breach, what must be done to remedy it and the date by which it must be done.

That date must be no less than 14 days after service, and the creditor cannot take the action listed in section 87 before then. The notice must also contain prescribed information about the consequences of not complying and a copy of the default information sheet.

When a borrower can apply

Section 129(1) lets the court make a time order if it appears just to do so. Relevant occasions include an application for an enforcement order, an application by the borrower after being served with a default notice or certain other notices, and a creditor’s action to enforce the agreement or recover goods or land. A newer paragraph, inserted by a 2025 statutory instrument that took full effect on 15 July 2026, extends this to a borrower under a regulated deferred payment credit agreement who has been told the creditor intends to demand earlier payment, restrict rights or terminate the agreement.

What a time order can do

Under section 129(2), a time order provides for payment of the sum owed by instalments, at times the court considers reasonable having regard to the means of the borrower and any surety, or for remedying a breach other than non-payment within a period set by the court, or both. It is therefore aimed at affordability and breaches that can be put right, rather than at cancelling a debt.

Section 130(1) allows the court to make a time order that reflects an instalment offer accepted by the creditor, without hearing evidence of means. Section 130(6) allows the court to vary or revoke an order on application by anyone affected, which is relevant if circumstances change.

Effect on the creditor

Where a time order gives the borrower a period to remedy a breach, section 130(5) prevents the creditor from taking the section 87(1) actions during that period. If the breach is remedied in that time, it is treated as not having occurred. For instalment orders, the practical effect is that payments are made at the court-set amount, so the borrower needs to consider carefully whether the amount is genuinely affordable before proposing it.

Scotland

Section 129(3) provides that where, in Scotland, a time to pay direction or time to pay order has been made for a debt, a time order cannot then be made for the same debt.

Special cases

Section 130(2) says that, for hire-purchase and conditional sale agreements only, a time order for instalments may also deal with sums that are not yet payable but would become payable if the agreement continued. Section 130(4) treats a borrower who keeps the goods after such an order as a bailee (or, in Scotland, a custodier) even though the agreement has ended. Section 130(3) excludes a time order for instalments where the agreement is secured by a pledge and regulations make a notice unnecessary to enforce the pledge.

The statute does not set out court forms, fees or the steps for applying. Those are matters for the court and its procedure rules, so the court or a debt adviser can confirm them for a particular case.

FAQs

Can a lender act straight away after a missed payment?

Not for termination or recovery. Section 87 requires a default notice, and section 88 gives at least 14 days to remedy the breach.

Does a time order cancel the debt?

No. Section 129(2) provides for instalments or remedying a breach, not for writing off what is owed.

Must the court always hear evidence of the borrower’s means?

Not always. Section 130(1) allows the court to make an order that gives effect to an instalment offer the creditor has accepted, without hearing evidence of means.

Which agreements can a time order cover?

Section 129 refers to regulated agreements and to securities for them, so the first question is whether the agreement is regulated.

Can a time order be changed later?

Yes. Section 130(6) allows the court to vary or revoke it on the application of any person affected.

Bottom line

A time order lets a court in England and Wales set reasonable instalments or a period to fix a breach for a regulated agreement, usually after a default notice or in enforcement proceedings. It does not reduce the debt, and a creditor must serve a compliant default notice first. This is general information, not financial or legal advice; a debt adviser can help a borrower decide whether to apply.

Sources

• legislation.gov.uk, “Consumer Credit Act 1974, section 87: Need for default notice”
• legislation.gov.uk, “Consumer Credit Act 1974, section 88: Contents and effect of default notice”
• legislation.gov.uk, “Consumer Credit Act 1974, section 129: Time orders”
• legislation.gov.uk, “Consumer Credit Act 1974, section 130: Supplemental provisions about time orders”

A pawnbroker lends money against an item left as security. Where the loan is a regulated agreement, sections 114 to 121 of the Consumer Credit Act 1974 give the borrower specific protections. The legislation marks these sections as applying across the United Kingdom, while the Citizens Advice guidance quoted below is written for England.

What a pawn is and the pawn receipt

Citizens Advice describes a pawnbroker as someone who lends money according to the value of goods left with them, known as being pledged. Section 114 requires anyone who takes an article in pawn under a regulated agreement to give the person handing it over a receipt in the prescribed form, called a pawn-receipt, at the time the article is received. Taking an article in pawn from a person the pawnbroker knows, or who appears and is, a minor is an offence. Citizens Advice says the pawnbroker gives a ticket, and that a separate pawn receipt is usually provided unless the ticket is part of the credit agreement.

The redemption period

Under section 116, a pawn is redeemable at any time within six months after it was taken. The period agreed between the parties for the credit can be longer, and section 116(3) says that if the item is not redeemed by the end of the redemption period it remains redeemable until the pawnbroker realises it, except where ownership has already passed to the pawnbroker under the small-loan rule. Section 116(4) adds that no special charge may be made for redeeming after the redemption period, and safekeeping charges cannot rise at that point.

Citizens Advice adds that the pawnbroker must keep the goods for at least six months, that the item can be reclaimed at any time by repaying the loan plus interest, and that the period can be extended by paying the interest only and re-pledging the goods.

Redeeming an item

Section 117 requires the pawnbroker, on surrender of the pawn-receipt and payment of the amount owing, to deliver the pawn to the person holding the receipt. That duty does not apply where the pawnbroker knows, or has reasonable cause to suspect, that the bearer is neither the owner nor authorised by the owner. The pawnbroker is not liable in tort for delivering, or for refusing to deliver, in the circumstances the section describes.

Citizens Advice covers the case of a lost ticket. For a loan of £75 or less, the pawnbroker can provide a standard form declaring that the ticket is lost and the goods are the borrower’s, although it might refuse if it doubts ownership. Above that, or if the form is refused, a magistrate or commissioner for oaths must be asked to witness a sworn statement in England and Wales, which involves a fee; the borrower then either reclaims the goods or makes a new six-month agreement.

If the item is not redeemed

Section 120 draws a line at £75. If the redemption period is six months, the pawn secures fixed-sum credit not exceeding £75 or running-account credit with a limit not exceeding £75, and certain conditions about earlier part-repayment are met, ownership of the pawn passes to the pawnbroker at the end of the redemption period. In any other case the pawn merely becomes realisable, meaning the pawnbroker may sell it. Where a borrower could apply for a time order, the five days after the redemption period are added before the consequences take effect.

How a sale works

Section 121 allows the pawnbroker to sell a realisable pawn after giving the borrower the prescribed period of notice, with the asking price and other prescribed particulars, subject to exceptions set by regulations. Afterwards the pawnbroker must give the borrower prescribed written information about the sale, its proceeds and its expenses.

If the net proceeds cover what would have been payable to redeem the pawn on the sale date, the debt is discharged and any surplus belongs to the borrower. If they fall short, the debt becomes the shortfall. Where the borrower says the price was below true market value, the pawnbroker must prove that reasonable care was used to obtain it or the calculation uses true market value, and the pawnbroker must likewise prove that the sale expenses were reasonable.

FAQs

How long does a pawn loan usually last?

A pawn must be redeemable for at least six months, and section 116 allows the parties to agree a longer period.

Does a borrower need the ticket to get an item back?

The pawnbroker delivers on surrender of the pawn-receipt and payment, and Citizens Advice describes the procedure for a lost ticket.

Does the £75 rule mean the item is simply kept?

For a qualifying small pawn with a six-month redemption period, section 120 says ownership passes to the pawnbroker at the end of the period; larger pawns become realisable and must be sold with the surplus returned.

Bottom line

Under the Consumer Credit Act 1974, a regulated pawn comes with a receipt, a redemption period of at least six months, a delivery duty on repayment and, for larger loans, a sale process that credits any surplus to the borrower. Small pawns of £75 or less can pass to the pawnbroker if the item is not redeemed. This is general information, not financial advice; the pawn agreement itself sets the amounts and dates.

Sources

• legislation.gov.uk, “Consumer Credit Act 1974, section 114: Pawn-receipts”
• legislation.gov.uk, “Consumer Credit Act 1974, section 116: Redemption period”
• legislation.gov.uk, “Consumer Credit Act 1974, section 117: Redemption procedure”
• legislation.gov.uk, “Consumer Credit Act 1974, section 120: Consequence of failure to redeem”
• legislation.gov.uk, “Consumer Credit Act 1974, section 121: Realisation of pawn”
• Citizens Advice, “Pawnbrokers”

Bankruptcy is one way to deal with debts that cannot be paid, including credit card, loan and short-term credit debts that have become unmanageable. GOV.UK says it can lead to freedom from most debts, but that possessions may be sold and restrictions apply. The process described here is for England and Wales; GOV.UK says it is different in Scotland and in Northern Ireland.

Two routes into bankruptcy

GOV.UK says a person can be made bankrupt in two ways: by applying personally, or when a creditor applies. It advises looking at other options first, because alternatives to bankruptcy do not restrict a person as much. Only individuals can become bankrupt; the position for limited companies is different.

Applying yourself

The application can only be made online. On 21 September 2026 GOV.UK gave the fee as £680, payable in full before submission, in instalments if necessary, and the guide also states that a debt adviser can point to charities that may help with it. An adjudicator at the Insolvency Service checks whether the requirements are met and whether other money, such as a pension or savings, could pay the debts instead. If the application is accepted a bankruptcy order is issued and the case passes to an official receiver. GOV.UK says the applicant should hear within 28 days, although it can take longer if more questions are asked.

The applicant’s name goes on the Land Charges register, which lenders can search, and a sole owner’s property title can be restricted. Name and address are published in the Individual Insolvency Register and the Gazette, although a person at risk of violence can apply to the court for an order to keep the address out of publication.

When a creditor applies

GOV.UK says a creditor can apply to the court if the debtor owes £5,000 or more and has not paid, or has broken the terms of an Individual Voluntary Arrangement. Creditors have to try other legal routes first, usually a statutory demand or a court judgment. The court sets a hearing at least 14 days after the petition is given, and a debtor who wants to oppose must do so at least 5 days before the hearing using form Bank 6. At the hearing the court can make a bankruptcy order, stay or dismiss the petition, or adjourn.

What the official receiver and trustee do

The official receiver usually deals with the case and acts as trustee, checking the debtor’s finances, sometimes interviewing the debtor and sending a report to creditors. GOV.UK says the debtor must supply information, tell the trustee about changes in income or possessions, and disclose anything that needs protecting. Failing to co-operate can prolong bankruptcy.

The trustee decides how much of the debtor’s income is needed to live on. Spare income can be paid under an income payments agreement lasting up to 3 years, or under a court-ordered income payments order. Bank accounts are usually frozen, although a trustee can ask the bank to release money urgently needed.

Restrictions, home and possessions

While bankrupt, GOV.UK says a person cannot borrow more than £500 without telling the lender, act as a company director or create, manage or promote a limited company without court permission, or trade under a different name without disclosing the bankruptcy name. Breaching restrictions can lead to prosecution. Restrictions can be extended if the official receiver believes the person acted carelessly or dishonestly.

The trustee may sell a family home if equity exceeds £1,000, or apply for a charging order. If nothing has been done within 3 years, the home usually transfers back. A sole owner cannot sell without the trustee, while a joint owner’s equity passes to the trustee. Items needed for work or essential household goods can usually be kept unless worth more than a reasonable replacement.

Debts that remain and when it ends

Some debts continue, including those arising from fraud, student loans, secured debts such as a mortgage where the person stays in the property, and DWP budgeting or crisis loans. Child maintenance debts and personal injury damages may also remain unless the court decides otherwise.

GOV.UK says the person is usually discharged automatically after 12 months, although this can be delayed by lack of co-operation, and that the trustee keeps working after discharge. Bankruptcy can also be annulled, for example when the order should not have been made or all debts and fees are paid or an Individual Voluntary Arrangement is agreed.

FAQs

Can a limited company become bankrupt?

No. GOV.UK says only individuals can become bankrupt.

How long does bankruptcy usually last?

GOV.UK says discharge is usually automatic after 12 months, but it can take longer if the person does not co-operate.

Does bankruptcy apply the same way in Scotland?

No. GOV.UK says the process is different in Scotland and in Northern Ireland.

Bottom line

In England and Wales, bankruptcy starts either with an online application, which an adjudicator reviews, or with a creditor’s petition for a debt of £5,000 or more. It usually ends after 12 months but brings restrictions, possible sale of assets and a public record. This is general information, not financial or legal advice; free debt advice should be sought before applying, as other options may fit better.

Sources

• GOV.UK, “Becoming bankrupt”
• GOV.UK, “Apply for bankruptcy”

A borrower under a regulated consumer credit agreement, such as a personal loan or a short-term loan, has a statutory right to repay it early. Section 94 of the Consumer Credit Act 1974, which the legislation marks as applying across the United Kingdom, sets the right out, and the Consumer Credit (Early Settlement) Regulations 2004 deal with the rebate. Whether an agreement is regulated should be checked on the agreement itself.

The statutory right to settle early

Section 94(1) entitles the debtor under a regulated consumer credit agreement, at any time, to discharge the whole debt by giving notice to the creditor and paying everything owed under the agreement, less any rebate allowable under section 95. Section 94(6) says a notice of this kind need not be in writing unless the agreement is secured on land. Citizens Advice nonetheless advises writing to the lender to ask for an “early settlement figure”, the total needed to clear the loan.

Citizens Advice says the types of agreement usually covered by the Act include personal loans, credit cards, payday loans, hire purchase, catalogue accounts and store cards, and that a regulated agreement should say so at the top of its first page. Its guidance is written for England, and the equivalent pages for Scotland, Wales and Northern Ireland are separate.

The 28-day settlement date

Regulation 5 of the 2004 Regulations treats the settlement date for calculating the rebate as the date 28 days after the creditor received the borrower’s notice, or any later date specified in the notice, provided the borrower pays by that date. Citizens Advice puts it in plain terms: after asking for a settlement figure, the borrower has 28 days from the lender’s receipt of the request to pay in full, and asking for a figure does not commit the borrower to going ahead.

Interest rebates

Regulation 2 requires the creditor to allow a rebate at least equal to the amount calculated under the Regulations when early settlement takes place. Early settlement includes discharge under section 94(1), refinancing, breach of the agreement, or any other reason that makes the debt payable before the time fixed by the agreement. The rebate is calculated by a formula in the Regulations, so the saving depends on how much of the term remains and how charges were structured.

Regulation 2(2) lists agreements outside the rebate rule, including agreements under which no payments of items in the total charge for credit fall due after the settlement date, running-account credit such as credit cards, and certain land mortgages. Citizens Advice says the total amount payable is reduced when a covered agreement is paid off early.

Paying off part of the debt

Section 94(3) and (4) give a similar right to part-settle an agreement that is not secured on land. The borrower gives notice, pays part of the amount due before the time fixed by the agreement and makes that payment within 28 days of the creditor receiving the notice, or by a later date named in it. Under section 94(5) the debt is then discharged by the amount paid plus any rebate under section 95.

Citizens Advice notes that the saving on interest and charges from a part payment is smaller than from a full settlement, and suggests asking how much the payment will reduce the total loan and future payments, since it may be possible to keep the same monthly payment over a shorter period.

Limits on early repayment compensation

Section 95A allows a creditor to claim a compensatory amount only in narrow circumstances. The agreement must fix the rate of interest for a period, the payment under section 94 must exceed £8,000 (or the total in any 12-month period must exceed that figure), the agreement must not be an overdraft-type debtor-creditor agreement, and the payment must not come from payment protection insurance proceeds. The amount must be fair and objectively justified.

It is also capped at the lower of a percentage of the amount repaid early, being 1% where more than a year of the term remains and 0.5% where a year or less remains, and the interest that would have been paid between the payment date and the date fixed by the agreement. For a short-term loan far below £8,000, this compensation power does not arise.

FAQs

Must an early settlement request be in writing?

Section 94(6) says notice need not be in writing unless the agreement is secured on land, but Citizens Advice recommends writing so that the request and the lender’s figure are recorded.

Does asking for a settlement figure oblige me to pay?

No. Citizens Advice says the borrower can carry on with the usual payments instead.

Does this apply in Scotland and Northern Ireland?

Sections 94 to 95A are marked as applying across the United Kingdom, though Citizens Advice publishes separate advice pages for each nation.

Bottom line

A regulated borrower can repay all or part of a loan early by giving notice and paying by the settlement date, normally 28 days after the lender receives the notice, and is entitled to a rebate under the 2004 Regulations. Compensation to the lender is confined to fixed-rate agreements where more than £8,000 is repaid in 12 months, and is capped. This is general information, not financial advice; the lender’s written settlement figure should be checked against the agreement.

Sources

• legislation.gov.uk, “Consumer Credit Act 1974, section 94: Right to complete payments ahead of time”
• legislation.gov.uk, “Consumer Credit Act 1974, section 95: Rebate on early settlement”
• legislation.gov.uk, “Consumer Credit Act 1974, section 95A: Compensatory amount”
• legislation.gov.uk, “The Consumer Credit (Early Settlement) Regulations 2004, regulation 2: Entitlement to rebate”
• legislation.gov.uk, “The Consumer Credit (Early Settlement) Regulations 2004, regulation 5: Settlement date”
• Citizens Advice, “Paying off a credit agreement early”

Most debts have a time limit for court action. In England and Wales, the Limitation Act 1980 sets a six-year period for actions founded on simple contract, and in Scotland the Prescription and Limitation (Scotland) Act 1973 extinguishes many obligations after five years. Northern Ireland has its own limitation law, which is not covered here. Citizens Advice’s advice on time limits is written for England.

The basic rule in England and Wales

Section 5 of the Limitation Act 1980, which the legislation marks as applying in England and Wales, provides that an action founded on simple contract shall not be brought after six years from the date the cause of action accrued. Citizens Advice explains the practical effect for most debts as a six-year time limit measured from when the borrower last wrote to the creditor or made a payment. Once the limit has passed the debt may be “statute barred”, meaning the borrower does not have to pay it, provided nothing has restarted the clock and no court claim has been made.

What restarts the clock

Section 29 of the 1980 Act provides that where a right of action to recover a debt has accrued and the person liable acknowledges the claim or makes any payment in respect of it, the right is treated as accruing on the date of the acknowledgment or payment. A current period can be repeatedly extended, but a right of action already barred by the Act is not revived by a later acknowledgment or payment. Section 30 says an acknowledgment must be in writing and signed to be effective under section 29.

Citizens Advice warns in practical terms not to contact a creditor in writing, including by text, email or online chat, and not to make any payment, even a small one or a payment made by someone else on the borrower’s behalf, if the limit might have ended or might end soon, because doing so could look like agreeing the debt is owed and could reset the time limit for another six years. Checking details is possible by phone. For joint debts, Citizens Advice says a letter from one debtor resets the limit only for that person, but a payment by either resets it for both.

If a creditor keeps chasing

Where the debt is statute barred, Citizens Advice says a borrower can write to the creditor to stop it contacting them, including a statement such as “I don’t admit any liability for your claim”, and that the letter should not say the amount is wrong or that the borrower is unsure what is owed. If the creditor still insists the debt is not barred, it would have to go to court to prove it, and a borrower who receives court papers should respond by the deadline and raise limitation as a defence. Citizens Advice adds that once a court order exists it is too late to claim the debt is statute barred, although if the debt was already barred when the order was obtained the order might be changed. A judgment stays on a credit file for six years. Continued contact about a barred debt can be complained about to the creditor and then the Financial Ombudsman Service.

Breathing space and mortgage debt

Citizens Advice notes that where a borrower is in a breathing space, the time limit is automatically extended to end eight weeks after the breathing space ends. It also says the limit is longer for mortgage debts after repossession: six years for interest and 12 years for the main amount.

Scotland

Section 6 of the Prescription and Limitation (Scotland) Act 1973 extinguishes an obligation to which it applies if it has subsisted for a continuous period of five years without any relevant claim having been made and without the obligation having been relevantly acknowledged. That differs from the English position: in Scotland the obligation is extinguished, rather than a court action being barred, and the period is five years. Periods during which the creditor failed to claim because of the debtor’s fraud or an error induced by the debtor’s words or conduct are not counted. A Scottish debtor should take Scottish advice.

FAQs

Does a debt disappear after six years in England and Wales?

Not automatically. The debt may become statute barred, meaning the creditor cannot take court action, but a written acknowledgment or a payment can restart the limit, and a court claim made in time changes the position.

Will a small payment restart the time limit?

Yes, it can. Section 29 treats any payment in respect of the debt as restarting the period, and Citizens Advice warns that even small payments can reset the time limit.

Can I just ignore court papers about an old debt?

No. Citizens Advice says to respond by the deadline and raise the time limit in the defence; if the case is undefended the court will make a judgment.

Bottom line

Limitation is a defence to court action, not a wipe-out of what is owed. In England and Wales the usual limit is six years, restarted by a signed written acknowledgment or a payment; in Scotland a five-year prescription can extinguish the obligation. Anyone with an old debt should get advice before writing or paying anything. This is general information, not legal advice.

Sources

• legislation.gov.uk, “Limitation Act 1980, section 5: Time limit for actions founded on simple contract”
• legislation.gov.uk, “Limitation Act 1980, section 29: Fresh accrual of action on acknowledgment or part payment”
• legislation.gov.uk, “Limitation Act 1980, section 30: Formal provisions as to acknowledgments and part payments”
• legislation.gov.uk, “Prescription and Limitation (Scotland) Act 1973, section 6: Extinction of obligations by prescriptive periods of five years”
• Citizens Advice, “Check if you have to pay a debt”
• Citizens Advice, “If your debt is statute barred”

Many borrowers lose track of the terms they signed. Under the Consumer Credit Act 1974, which applies across the UK, a debtor under a regulated credit agreement can send a written request for a copy of the executed agreement and an account statement. Sections 77 and 78 set out the duty for fixed-sum and running-account credit respectively, and there are consequences if the creditor fails to comply.

Fixed-sum credit: section 77

Under section 77(1), the creditor under a regulated agreement for fixed-sum credit, within the prescribed period after receiving a written request from the debtor and payment of a fee of £1, must provide a copy of the executed agreement (if any) and any other document referred to in it. It must also provide a statement signed by or on behalf of the creditor showing, according to the information it is practicable to refer to, the total sum paid under the agreement, the total sum which has become payable but remains unpaid with the dates each amount fell due, and the total sum still to become payable with the date, or method of working out the date, each amount falls due.

If the creditor lacks enough information to state the future amounts and dates, section 77(2) treats it as complying if the statement gives the basis on which they would be worked out under the agreement.

Running-account credit: section 78

Section 78(1) creates the same kind of duty for running-account credit, such as an account that can be drawn on repeatedly, with the same fee of £1 and a copy of the agreement and other documents referred to in it. The statement must show the state of the account, the amount currently payable and the amounts and due dates of payments that will later become payable if the debtor draws nothing further on the account. Section 78(1A) says the fee wording is disapplied where the request also amounts to a request for information under regulation 49 of the Payment Services Regulations 2017.

Section 78 also requires the creditor to give statements in the prescribed form showing the state of the account at regular intervals of not more than twelve months and, where the agreement provides for periodic payments or charges, at the end of each period with any movement in the account. Those periodic statement duties do not apply to a small agreement.

Limits on the right

Both sections state that the duty does not apply to an agreement under which no sum is, or may become, payable by the debtor, or to a request made less than one month after a previous request about the same agreement was complied with. Both also exclude non-commercial agreements. The revised text of section 77 records that words excluding a regulated deferred payment credit agreement were inserted with effect from 15 July 2025 for specified purposes and from 15 July 2026 for the remainder, so the section’s reach for that category should be checked against the current version.

What happens if the lender does not comply

Under section 77(4), if the creditor fails to comply, it is not entitled, while the default continues, to enforce the agreement. Section 78(6) says the same for running-account credit. The unenforceability lasts only while the default continues, so it is not a permanent release from the debt, and a lender that later provides the documents can resume enforcement. The prescribed period for responding is set in regulations rather than the sections themselves, so it should be checked when a request is made.

Using the documents

A copy of the agreement and statement can help a borrower see what was promised, check the total paid, and compare the lender’s figures with their own records before deciding on a repayment plan, a complaint or a dispute about an entry on a credit file. A request should be in writing, dated, name the agreement and enclose the £1 fee, and a copy should be kept along with proof of postage.

FAQs

How much does the request cost?

Sections 77(1) and 78(1) both state a fee of £1, and section 78(1A) removes that wording where the request also amounts to a Payment Services Regulations 2017 request.

Can I ask more than once?

Not more than once a month for the same agreement. Sections 77(3) and 78(3) exclude a request made less than a month after a previous request was complied with.

Does this apply in Scotland and Northern Ireland?

The legislation marks both sections as applying UK-wide, although court procedures for enforcing debts differ between the nations.

Bottom line

Sections 77 and 78 give borrowers a low-cost way to get the agreement and a statement of account, and lenders that ignore a request cannot enforce the agreement while the default continues. The right has exceptions, including for non-commercial agreements and frequent requests. This is general information about the statute, not legal advice; confirm the current wording on legislation.gov.uk.

Sources

• legislation.gov.uk, “Consumer Credit Act 1974, section 77: Duty to give information to debtor under fixed-sum credit agreement”
• legislation.gov.uk, “Consumer Credit Act 1974, section 78: Duty to give information to debtor under running-account credit agreement”

Home credit, also called doorstep lending, is a loan where the lender calls at the borrower’s home to collect repayments. Citizens Advice describes the loans as usually small and carrying a high rate of interest. The rules on offering credit at the door come from the Consumer Credit Act 1974, which applies across the UK, and from FCA guidance; Citizens Advice’s own advice pages are written for England and have separate versions for Scotland, Wales and Northern Ireland.

Authorisation: the first check

Citizens Advice states that home credit lenders must be authorised by the Financial Conduct Authority. It adds that agents of a home credit lender do not need their own authorisation and can come under the authorisation of the lender they represent. It advises asking to see the authorisation of the person or their lender before borrowing, and says that a person without one is operating illegally, in which case the borrower should avoid the loan. Citizens Advice adds separately that a borrower who takes a loan from an unauthorised lender has not broken the law: the lender has.

The canvassing offence

Section 48 of the Consumer Credit Act 1974 defines canvassing off trade premises: soliciting a person to enter a regulated agreement by making oral representations during a visit to a place other than the business premises of the creditor, supplier, canvasser or consumer, where the visit was not made in response to a request on a previous occasion. Section 49 makes it an offence to canvass debtor-creditor agreements off trade premises. It also makes it an offence to solicit an individual during a visit made in response to a request that was not in writing signed by or for the person making it, where the soliciting would otherwise have counted as canvassing.

Citizens Advice summarises the effect: it is a criminal offence for a lender to call at your home to offer to lend you money unless the visit is made in response to a written and signed request. It adds that if an agreement is not properly made, the lender may not be able to force the borrower to repay the money.

What counts as a valid request

The FCA’s guidance in CONC 3.10.3G sets out its view of sections 48 and 49. Discussions about new borrowing or refinancing in the borrower’s home must be initiated by the borrower, either by a specific written request or, only where the individual is in the borrower’s home for another purpose, by an oral invitation. A valid request is a positive act by the borrower taken specifically to discuss other borrowing; the visit should be made in response, within any timing the borrower specified or within a reasonable time; and a separate request should be made for each agreement or contractual variation.

The FCA is critical of so-called “umbrella requests”, signed when entering an agreement and purporting to allow home visits about other borrowing at any time. In its view they do not meet the requirements of the Act because they create open-ended opportunities to raise additional borrowing. The guidance adds that an agent visiting only to collect on an existing loan is not stopped from discussing new borrowing if the borrower asks, but that if the agent raises new finance it would be very difficult to show the visit was not made with that purpose. CONC 3.10.4G confirms that breaching section 49 is a criminal offence, and only a court can decide what sections 48 and 49 mean.

Fair treatment and other rules

Citizens Advice also notes that lenders must follow rules to make sure customers are treated fairly, and that complaints can be made where they are not followed. CONC 3.10.2R adds that a spoken promotion made to a customer outside the firm’s premises may only be made at an appropriate time of day, and the person must identify themselves and the firm and make the purpose clear at the outset.

Vouchers, complaints and illegal lenders

Doorstep lenders may also offer trading cheques and vouchers, which Citizens Advice says can be exchanged for goods, usually clothing and soft furnishings at specific shops, and repaid to an agent who normally calls at the home; interest rates are often high. Many home credit lenders belong to the Consumer Credit Association and follow its Code of Practice, so a complaint about a member can go to the association. If someone lends without FCA authorisation they are a loan shark, and Citizens Advice says a borrower who is threatened should contact the police straight away and can report illegal lending to the Illegal Money Lending Team.

FAQs

Can a lender knock on my door to offer me a loan?

Not unless invited. Citizens Advice says it is an offence for a lender to call to offer a loan unless the visit follows a written and signed request.

Does a collection agent need separate FCA authorisation?

According to Citizens Advice, agents can come under the authorisation of the lender they represent, so check the lender’s authorisation.

Can a general permission to call cover future loans?

The FCA says an “umbrella request” signed at the start of a loan does not meet the Act’s requirements, and a separate request should be made for each agreement.

Bottom line

Home credit is regulated credit, so the lender must be FCA authorised, and the law sharply limits when a lender can raise new borrowing at your door: only in response to a written and signed request, not through a blanket permission. Anyone visited without a request, or threatened over repayments, can seek advice from Citizens Advice, the FCA or the police as appropriate. This is general information, not legal advice.

Sources

• Citizens Advice, “Home credit (Doorstep loans)”
• FCA Handbook, “CONC 3.10 Financial promotions not in writing”
• legislation.gov.uk, “Consumer Credit Act 1974, section 49: Prohibition of canvassing debtor-creditor agreements off trade premises”
• legislation.gov.uk, “Consumer Credit Act 1974, section 48: Definition of canvassing off trade premises”
• Citizens Advice, “Loan sharks”

Credit reference agencies (CRAs) hold information that lenders use to decide whether to offer credit, so an incorrect entry can cause an application to be refused. The UK’s three main consumer CRAs are Equifax, Experian and TransUnion, and the Information Commissioner’s Office (ICO) explains how to challenge inaccurate data. The correction procedure in the Consumer Credit Act 1974 applies UK-wide.

Get your statutory report first

The ICO says everyone has the right to request a copy of the information held about their financial standing from any CRA, free of charge, verbally or in writing. It advises looking for the phrase “statutory report” on CRA websites because no subscription or fee is required, and suggests including full name, previous names, addresses for the last six years and date of birth. The CRA has one month to respond, or up to two extra months in some circumstances if it says why within the first month. The ICO also notes that lenders decide which CRAs they report to, so a file at one agency may contain accounts that another lacks.

Who is responsible for an entry

According to the ICO, the problem may lie with the lender or organisation that supplied the data rather than the CRA, and as a general rule an entry showing a company’s name is that company’s responsibility. CRAs cannot amend such data without that company’s permission, although the ICO still expects them to take reasonable steps to keep reported information accurate. Entries the CRAs generate themselves, such as financial links, linked addresses and alias information, are their responsibility. The ICO says lenders can also update their own entries directly through facilities the CRAs provide, so an urgent change should not need to be routed through the agency.

The formal notice route under the Consumer Credit Act

Section 159 of the Consumer Credit Act 1974 lets an individual who has received their file and considers an entry incorrect, and likely to be prejudiced if it is not corrected, give the agency notice requiring it to remove or amend the entry. Within 28 days of receiving the notice, the agency must tell the individual whether it has removed the entry, amended it or taken no action.

If the entry is not removed, the individual can serve a further notice within 28 days requiring the agency to add a notice of correction of up to 200 words drawn up by the individual. The agency has a further 28 days to confirm that it will comply, unless it intends to apply to the relevant authority because the notice would be incorrect, unjustly defamatory, frivolous, scandalous or otherwise unsuitable. If the agency does not reply in time, the individual can also apply to the relevant authority, who may make an order; failing to comply with the order is an offence. The relevant authority is the Information Commissioner for individuals, or the FCA for partnerships and other unincorporated bodies.

Common situations

The ICO gives worked answers to several scenarios. A default can normally be recorded even if no default notice was received, provided it accurately reflects events and the borrower was told this could happen, because data protection law does not require a default notice before listing a default. After a discharge from bankruptcy, the borrower should notify each lender, who will not be told automatically, and ask them to update the entry, with the ICO suggesting a complaint if the lender does not amend it within a month of receiving proof. A file that shows another person with the same name is usually a mix-up, but could be identity fraud, and should be reported first to the CRA. Credit taken in the borrower’s own name for someone else will show on the borrower’s file even if the other person stopped paying.

Where to complain

The ICO advises complaining first to the CRA and, where relevant, the original lender. If both refuse to correct an obvious inaccuracy, a complaint can be made to the ICO, although the ICO says it is not its role to decide financial disputes. The ICO’s page also notes that its guidance is under review because of changes made by the Data (Use and Access) Act, so the current position should be checked before relying on it for a specific case.

FAQs

Is it free to see my credit file?

Yes for the statutory report. The ICO says there is no obligation to sign up to a monthly subscription to obtain a copy of the information about your financial standing.

How long does a credit reference agency have to answer a correction notice?

Section 159 gives it 28 days from receiving a notice to say whether it removed the entry, amended it or took no action.

Can I add my own explanation to an entry?

Yes. If an entry is not removed, section 159 allows a notice of correction of up to 200 words, subject to the agency’s right to apply to the relevant authority if it is unsuitable.

Bottom line

An incorrect credit entry can be challenged by getting the statutory report, identifying whether the lender or the CRA is responsible, and using the section 159 notice procedure with its 28-day steps. If both refuse a clear correction, the ICO can be asked to look at it. This is general information based on the sources below, not legal advice.

Sources

• Information Commissioner’s Office, “Credit”
• legislation.gov.uk, “Consumer Credit Act 1974, section 159: Correction of wrong information”