The prescription of debt is the extinction of the right of a creditor to demand the collection of an obligation from the respective debtor. This, after a period established by law has elapsed.
In other words, the prescription of a debt means that the power to demand the repayment of a loan or the fulfillment of a payment has expired.
It is worth noting that a series of conditions must be met for the prescription of the debt to occur. The first is that an explicitly established legal term elapses. For example, two years from the moment that compliance with the obligation can be required.
Another important issue is that the prescription is not automatic, but must be requested by the debtor. Later, we will see other considerations.
Before continuing, it is important to remember that, in general, the statute of limitations is the period in which, once it has elapsed and is recognized by the law, a tribute cannot be set, a debt collected, or an instance compromised. Within this concept, we find the debt prescription.
Characteristics of the debt prescription
Among the characteristics of the debt prescription we can highlight:
- To recognize the prescription, the creditor must not have initiated any action to claim the debt.
- It is an expiring prescription because the creditor’s right to take legal action to claim the repayment of the debt is extinguished.
- The terms for the prescription of the debt may vary depending on the type of obligation. In the case of mortgage debts, the periods may be different than for promissory notes or bills of exchange, for example.
- Each country has its own legislation on the prescription of debts, so the conditions and terms vary.
- The statute of limitations does not mean that the debt has disappeared. What is extinguished is the creditor’s right to claim (by legal means). This implies that, by defaulting, the debtor could likewise be affected by his credit history.
An example of a debt prescription can be the case of some specific debts in Spain.
Article 1967 of the Civil Code states: «For the course of three years, the actions for the fulfillment of the following obligations are prescribed: To pay the judges, lawyers, registrars, notaries, notaries, experts, agents and curiales their fees and rights , and the expenses and disbursements that they would have made in the performance of their positions or offices in the matters to which the obligations refer “.