Debt becoming statute-barred
Liabilities will expire in accordance with three different periods of limitation.
1. The general period of limitation is three years. The limitation period may be interrupted and extended for another three years. The three-year general limitation period applies to the most common debts, such as consumer credit, rent, car, housing and student loans. The payment judgment extends the limitation period for these debts to five years.
2. An extraordinary period of limitation is five years. It applies to public claims such as taxes and fines, maintenance and Kela’s child support allowances. A public debtor does not need to have court order, but can recover it through distraint right away. In practice, the limitation period for public debts is slightly longer than five years because their expiration begins only after the beginning of the year following the year in which the fee was imposed.
3. The final limitation period is 15, 20 or 25 years and ultimately applies to all debts of general period of limitation.
Interruption of the general limitation period
The general limitation period may be interrupted in an informal way. The debt becoming statute-barred will be discontinued, for example, when the debtor acknowledges the debt by paying even only a part of it or providing a security.
The limitation period may be interrupted several times and the debt collected until the final limitation period ends the existence of the debt.
When the creditor gets court order for the debt collecting, the limitation period of the debt is extended to five years.
The measures taken by the creditor to collect the debt
The court order entitles the creditor to collect debts through distraint. Distraining income, tax returns or assets prevents the debt from expiring.
If the debt cannot be collected and the debtor is found to be penurious, the debt will be returned to the creditor. Then, the creditor has to interrupt the expiring by taking the debt once again to foreclosure until five years have elapsed since the previous collecting attempt.
If the debtor is a natural person, the deadline is 15 years after conviction.
If a creditor is an individual or a debt is based on an offense from which a debtor has been sentenced to imprisonment or community service, a debt can be collected for 20 years after the court order. The distraint authority does not automatically take into account the limitation due to the maturity of the debt, but the debtor must appeal to it and present a statement of maturity.
The debtor’s obligation to pay ceases when the debt becomes statute-barred. A debt of a private person expires 20 years after the maturity of the debt and if the creditor is also a private person, the final limitation period is 25 years.
The court may impose a time limit of 10 years after the original period of limitation if the debtor has substantially hampered the creditor’s interests by for example hiding or donating his property, concealing information or giving false information about his financial position. The creditor shall take such legal action no later than two years after the original deadline has expired.