Consumer Comeback Blog

Understanding The Statute Of Limitations On Debt

When we are getting hounded by debt collectors, we tend to lose our bearing. They intentionally try to throw us off. Debt collectors have bought our old debt for pennies on the dollar in most cases. But, there is a little known fact that every state has a statute of limitations on how long a lender can sue you over a debt that you owe. Debt collectors surely will not remind you of that fact, but you can use it to your advantage in order to stop the harassing phone calls at home and at your work.

What Is A Statute Of Limitations?

Like most small crimes, there is a statute of limitations or a limit to how long a creditor has to sue you. Each state has its own statute of limitations, and they are divided by the type of debt that you have. Credit cards have a different timeframe where you can be sued as opposed to another type of debt such as your mortgage or car loan. If you find yourself being contacted by a debt collector, you can stop further harassing collection attempts and calls in most cases by sending a cease and desist communications letter that points out the statute of limitations that has expired for the debt in question. You should always state in your letter that you do not want to be contacted about the debt again by that collection agency.

You May Still Get Sued After Statute Of Limitation

If the limit has expired on your debt, a collection agency may still try to file a lawsuit. You may have to appear in court, but you should be prepared to show that the debt has past the statute of limitations. You should never ignore a summons to appear in court. You run the risk of receiving a default judgment if you do. It will be incredibly hard and time consuming to go back and fix the problem that would have been absolved had you just appeared in court in the first place.

One Critical Mistake That You Have To Avoid

Once the statute of limitations has expired on a debt, there is one critical mistake that many borrowers make that is an exception to the statute of limitations rules. A borrower cannot reaffirm a debt, or the clock, so to speak, on the statute of limitation resets and starts all over again. This is a common and devastating mistake that consumers make. A borrower reaffirms a debt by making a payment or promising to pay in the debt in writing. If you have full intentions on paying a debt that you legally owe a company, then that is fine. But, if you have or cannot repay the debt, you should not make a promise to do so in writing or make a partial payment.

The statute of limitations is the maximum time a collection agency or debt collector can take to initiate legal action on a debt. The statute of limitation varies state by state and the type of debt that it is. Understanding the statute of limitations can help you when fighting debt collectors who have bought very old debt of yours. There is no substitute from knowing your rights and how the laws of your state work with respect to old debt.