Explanation:

- Time-barred Debt: This refers to debt that cannot be collected through court because the statute of limitations has expired.

- Option 1: As a set-off

- Set-off: A claim by the debtor to subtract their own claims against the creditor.

- Correct Answer: Time-barred debts can sometimes be used as a set-off.

- Option 2: As a counterclaim

- Counterclaim: A separate claim against the plaintiff in the course of the legal action.

- Can include time-barred debts under certain jurisdictions.

- Option 3: As a fresh suit

- Fresh suit: Initiating a new lawsuit to recover the debt.

- Not possible for time-barred debts as the law does not allow filing a fresh suit.

- Option 4: None of the above

- Not applicable, as time-barred debts can be claimed as a set-off.