Are you struggling with piles of debts that are making your life miserable? Unable to pay off your debts due to financial misfortune? Wondering how long a creditor can sue you legally for debt collections or when to stop worrying about your bad credit score? It depends on the laws of the governing state and the types of debt you have. Learn more about the state’s statute of limitations on debt collection and when to consult an expert debt & bankruptcy attorney.
What is a Statute of Limitations on Debt Collection?
Statutes of limitations on debt collection are laws that govern how long a creditor or debt collection company can take legal actions against you in case you fail to repay. Outside this statute of limitation, the creditor cannot file a lawsuit against you. That means the creditor cannot use legal remedies like liens, judgments or garnishments to collect the debt if the time period (according to the statute of limitation) has lapsed.
It may prevent you from getting lawfully sued by the creditor or debt collection agency after the statute of limitations has passed. That means the creditor will not be able to get a legal judgment that can be used to levy your account or garnish wages. However, it is often misrepresented. Therefore, you must seek consultation from debt & bankruptcy attorney to understand what a statute of limitation is not.
- Your Credit Report and Statute of Limitations: It is important to understand that the statute of limitations do not apply to your credit report. That means it does not govern how long a negative item will show on your credit report. For instance, collection accounts may appear on your report for about 7 years and 180 days from the original delinquency. Late payments, on the other hand, can show up for up to 7 years. Depending on the state you are living in and the type of account, this period can be greater or less than the statute of limitations.
Can a Creditor Pursue Debt After Statute of Limitation Passes? : Yes. While it is mostly misunderstood that creditors cannot collect debt from you once the statute of limitation has lapsed, but it is not true. The statute of limitation is applicable for time-barred debts. That means the creditors cannot file a lawsuit against you after this period, but they can continue pursue debts even beyond the statute of limitations.
For any doubts, consult a professional debt & bankruptcy attorney.
Statute of Limitations on Debt by State
The statute of limitations on debt depends on two factors – the type of debt you have and the state you are living in. Oral contracts, written contracts, promissory notes, and debt on accounts, all have different statute of limitations. Each state also has somewhat different limitations. Furthermore, if the debt collector has filed a lawsuit and got a judgment, even that can have a different statute of limitation based on the state where it is issued.
Therefore, it is important to know each state’s statute of limitations and specific laws in your jurisdiction.
When Does the Statute of Limitations Start?
The statute of limitation will start as soon as you fail to repay the agreed-upon amount within a specific date. But you have the option to reset this time period by making a payment on the debt or at least agreeing to make such repayments to the debt collector or the creditor.
However, before you repay or make a payment, it is crucial to ensure you know your rights under the statute of limitations on your debt as well as the Fair Debt Collection Practices Act. If you are not sure, get in touch with an expert debt & bankruptcy attorney.
Consult a Professional Attorney If You Have Questions
Understanding the statute of limitations can be complex. If a creditor or debt collection agency chases you for an old debt past the statute of limitations, they may not be able to sue you legally. But at the same time, they may continue trying to collect it. The situation may worsen if you do not know how the statute of limitations work or how the law may affect your debt.
In such scenarios, it is crucial to seek advice from a debt & bankruptcy attorney who can help you understand your rights and make the best use of statute of limitations on your debt.
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