What is the Statute of Limitations

When it comes to Credit Card Debt?

If you have old debts, you may be wondering if a creditor is able to collect on them.
It is true that debt collectors have only a limited number of years in which to take legal action and sue you to collect. This is known as the “statute of limitations.”

  • Each state allows for a different period of time to collect the debt.
  • Certain circumstances can reset the clock, and in those cases, the debt statute of limitations starts all over again.
  • Most states have debt collection periods of 3-6 years after the first missed payment and some have statute of limitation as long as 10 years.

After that time, the unpaid debt is considered “time – barred” meaning that a debt collector can no longer sue on the account. No matter where the debt collector is based, he’s bound by your state’s statute of limitations.

What Happens after the Statute of Limitations Expires?

After the statute of limitation expires, a debt collector cannot sue for repayment of the debt. However they may continue to contact you about repayment.

Once the statute of limitations has passed, you can decide if you will pay a time-barred debt. Each decision has it benefits and drawbacks. The FTC recommends consulting a debt relief attorney before taking action.

Final Demand Final Demand for payment
  • Choosing not pay to pay a debt collector: Even though a collector can’t sue you to recoup the debt after the statute of limitations expires, they can continue contacting you. Also, refusing to pay your debt will also have a negative effect on your credit score.
  • Making a partial payment to a debt collector: Paying off only some of the debt is risky. In some states, if you pay any amount, the debt is revived and is no longer time-barred. In other words, this resets the statute of limitations clock and debt collectors can once again sue.
  • Paying off the debt: If you choose to pay off the debt, even though the collector may not be able to sue you, this might help your credit score.

Some collectors may be willing to accept a less amount that what is owed. They may accept a lump sum payment or installments.

However, make sure that you have a written and signed agreement with the creditor that paying this amount will settle your full debt before you begin repaying. This document should state that the entire debt is being settled and that the amount to be paid will release you from any further obligation.

Doing this will prevent issues associated with them saying that it was a partial payment on the debt or selling the difference off to another collection company. Keep a record of the payments you make to pay off the debt.

Harold Shepley & Associates can Help

At Harold Shepley and Associates, LLC, we have the experience you need to deal with situations of old debt and the statute of limitations. We are a full service Law Firm that is client-oriented and will work hard to meet your personal needs in this situation.

Call us today at 877-827-9006, or complete our easy to use contact form. We’re ready to help.

author avatar
Ginger Nicklow

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