statute barred debt

Definition

Lent sum that cannot be recovered by the creditor or lender through legal action because the time limit imposed by the limitations act (see statute of limitations) has been exceeded. Commonly, different types of debts have different time limits after their due or settlement date, or the date the creditor or lender makes written demand for payment. Ordinary demand loans, for example, may have six years, and loans secured by a deed may have 12 years. Stockholders (shareholders) of a firm that is being liquidated or wound-up can object and stop the payment of statute barred debt.