Period of limitation for enforcement and final statute of limitations on debt

Period of limitation for enforcement

The provisions on the period of limitation for enforcement and the final limitation of the debt are included in the Execution Code. The enforcement order (e.g. decision of a district court or judgment by default), imposing the payment liability to a natural person is enforceable for 15 years. The period of limitation is extended to 20 years if the creditor according to the enforcement order is a natural person or if the debt is based on a crime for which the debtor has been sentenced to imprisonment or community service. The period of limitation is calculated from the date of the judgment by default or the final judgment or other final enforcement order. According to the Execution Code, which entered into force at the beginning of 2008, the expiry of the period of limitation will also mean final limitation of the debt. If distraint measures have been directed at a certain asset before the period of limitation expires, this asset may still be distrained to cover the debt, but garnishment of wages, pension or other periodical income is no longer possible.

Calculation of the period of limitation for enforcement

The provisions on the period of limitation are applied also to enforcement orders issued before the entry into force of the new act, as well as enforcement issues pending at the time the act enters into force. However, if the enforcement order has been issued before 1 March 1993, the period of limitation for the enforcement order and the final limitation of the debt are calculated from this date. In practise this means that the period of limitation for decisions, judgments by default and other enforcement orders filed on 1 March 1993 or before this date will expire on 1 March 2008. If the period of limitation is 20 years, an enforcement order filed on 1 March 1993 or before this date will expire on 1 March 2013.
The period of limitation for later enforcement orders is calculated according to the standard rule, for example an enforcement order issued on 1 July 1995 will expire on 1 July 2010 or on 1 July 2015. The debt may be recovered as late as on the last day of the period of limitation.

Examples:

Enforcement proceedings have been started to recover the following debts of debtor VV

• Final decision of the Court of Appeal in Turku, dated 26 September 1988, imposing on VV a liability to repay his loan to Corporate Bank Ltd – expires on 1 March 2008
• Decision of the Supreme Court, dated 27 February 1994, imposing on VV a liability to repay his loan to Corporate Bank Ltd – expires on 27 February 2009
• Final decision of Helsinki District Court, dated 7 April 1991, imposing on VV a liability to repay the sum he borrowed from his former spouse – expires on 1 March 2013
• Final decision of Vantaa District Court, dated 6 March 1992, imposing on VV a liability to compensate Corporate Bank Ldt for the damage he caused by aggravated fraud. The sentence for aggravated fraud was imprisonment for 7 months – expires on 1 March 2013.

The relation between limitation and the period of limitation

The provisions in the Execution Code on the period of limitation for enforcement and final limitation of debt must be kept separate from the limitation of a debt in accordance with the Act on the statute of limitations on debt. This Act includes provisions on limitation of debts in general and the limitation periods as well as interrupting the period of limitation. The general limitation period is three years from the due date. When a final decision or a judgment by default has been issued concerning the debt, the limitation period is five years from the date of the decision. After the interruption of the period of limitation of the debt, a new limitation period of the same length as the earlier period starts to run. The interruption of the limitation period may be arranged informally or through official measures. When enforcement proceedings are started in the matter the limitation of the debt is interrupted and a new limitation period of the same length as the earlier one is started when the pendency of the enforcement expires. However, the period of limitation for enforcement sets a final limit for how long a debt can be collected through recovery proceedings and the final limitation of the debt.

The legal effect of the expiry of the period of limitation

When the period of limitation for enforcement expires the debt can no longer be collected through any means and the debt is permanently statute barred. The debt can no longer be recovered for instance by a collection agency or from the assets of an estate of a deceased person. This period of limitation can not be interrupted. However, the creditor has the right to take legal actions against the debtor and require an extension to the period of limitation for the enforcement order. The court may extend the period of limitation by 10 years from the expiry of the original period of limitation, if the debtor has essentially complicated the receipt of the payment, for example by concealing or donating his or her assets, concealing information or giving false information about his or her financial circumstances. The creditor must take such actions at the latest within two years from the expiry of the original period of limitation.

Updated on 3rd of May 2011