Period of limitation for enforcement and final statute of limitations on debt
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.
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.
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 by reminding the debtor of the debt, demanding payment from the debtor or agreeing on payment of the debt with the debtor. In addition to these can limitation period of a debt be interrupted also through official measures like bringing an action on a debt.
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.
Provisions on the final expiry of debt, calculated from the date on which the debt fell due, entered into force on 1 January 2015. Before the amendment entered into force, creditors were able to collect debts for an infinite period of time, provided that they interrupted the expiry of the debt at three-year intervals and did not apply for grounds for enforcement against the debtor. The amendment introduced a time limit for the final expiry of these debts.
The time limit for the final expiration of debt, calculated from the due date, is 20 years. If the creditor is a natural person, the expiration period is 25 vuotta. This expiration period cannot be interrupted. The provision applies to monetary debts incurred by private persons, based on an agreement.
The new regulations on expiry of debt are applied retroactively in part. At the time the legislation entered into force, 15 years at most are considered to have passed of the time required for final expiry. This means that a debtor may collect the receivables for 5 or 10 years after the Act's entry into force.
Enforcement will not automatically take into account the final expiry of debt calculated from the date the debt fell due. Therefore, the debtor must appeal and present an account of the expiry.