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By Debbie Dragon
Debt collectors do not have an indefinite period of time to continue trying to collect payments from old debts. There is an ‘expiration date’, called the Statute of Limitations, that prevents debt collectors and/or the original lender, from pursuing you for the rest of your life on old debts. Before you go ahead and send in a payment on an old debt, check to be sure that the statute of limitations hasn’t expired. If the expiration date has passed, you may be protected by law and not liable for that debt.
Use the Statute to your Advantage
The statute of limitations starts for the date of ‘last activity’ on the account, as presented on your credit report. This is not always the last date of your payment. If you’ve communicated with the debt collector beyond the date you made the payment, and they’ve updated your credit report to show the new date as the date of last activity, the statute of limitations will start from that date.
Sometimes the statute of limitations has expired but debt collectors continue their attempts to collect because they hope the debtors do not know about the statute and that they’ll pay with enough threats. If you are 100% certain the statute of limitations has expired, you can simply ignore them. If a lawsuit is brought against you, you’ll have justification in that the time limit has expired for the collection of that debt.
If you enter a payment agreement, talk to the collectors or promise to make a payment; you will restart the statute of limitations to day one!
How Do You Know Your Statute of Limitations?
Each state has a different time period that collectors are allowed to pursue the collection of old debts. Check The Statute of Limitations on Debt for your states statute of limitations. Keep in mind if you move from one state to another, the debt collector may attempt to restart the statute of limitations for the new state; or extend the time period under the laws of the new state if they happen to be longer!
What the Statute of Limitations Can’t Do For You
Many people think the statute of limitations is their free ticket out of repaying a debt. Unfortunately, while it can help it certainly is not the magic solution.
It cannot:
* Prevent the debt from being reported on a credit report. The reporting of bad debt follows the credit reporting time limit allowances, so even if the debt has passed the statute of limitations, it can appear for several more years and affect your credit score.
* Erase debt. If you really owe that amount, the statute of limitations doesn’t indicate that you don’t owe the debt.
* Prevent a debt collector from filing a lawsuit against you. They will not be able to win (in most cases!) if the statute of limitations has passed, but you may still have to go through the ordeal of a court case.
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