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The Statue Of Limitations On Debt - For Dummies

By Michael Redbourn

Republish: EasyPublish™ Published: 31Aug2009 Word count: 633 Viewed: 2540 time(s) Get Free Content For Your Site

The first and perhaps the most important thing to understand about the Statute Of limitations On Debt, is that although debt collectors and creditors are allowed to contact you about a debt that you still owe forever, they can only sue you for it for a certain amount of time.

The amount of time varies from state to state, and some state's limits are as little as three years whereas others are as high as six years.

We shall use S.O.L in place of Statute Of Limitations from here on in, to make for easier reading, and typing :-)

Is A Debt Still Owed After The SOL Has Expired?

In essence, the only things that can nullify your obligation to pay a debt are,

a) A cancellation from the creditor.

b) Discharge in bankruptcy.

c) Payment of the debt.

What this means is that even after the statute of limitations has expired on a debt, you are still legally responsible for paying the debt.

But neither the creditor nor collector can use the court to make you pay it!

A very common question is,

Can I Be Sued For A Debt After The Statute Of Limitations Has Passed?

And the simple answer is "yes".

Because, although the SOL limits the time a creditor or collector can use the court to force you to pay a debt, it doesn't stop creditors and debt collectors from trying to collect the debt from you.

You can be sued, but if you show that the SOL has passed, then you won't have to pay, but you will need to send a written cease and desist letter.

So When Does The SOL Clock Start Ticking?

Well in most cases, you will say one date, and a collection service will say another.

According to law, the statute of limitations clock starts running from the date of the last activity on your account!

This could be,

a) The date you last made a payment.

b) The date of a "promise to pay" agreement.

And very importantly,

c) A date when you acknowledged liability for the debt.

Can The SOL Clock Be Reset?

Yes, and this is very important!

The clock can be restarted, which would be very detrimental to you, but only if you make a mistake.

So after your debt is covered by the SOL you must never,

a) Acknowledge that you owe the debt.

b) Make more payments.

c) Enter into some kind of payment plan.

d) Make an agreement to pay.

e) Make a charge on the account.

Certain Debts Are Never Covered By The SOL

a) Federal student loans.

b) Child support in some states.

c) And income taxes, of course.

Why is a debt showing on my credit report after the SOL has expired?

It's quite likely that an expired debt will still be showing on your credit report, after the expiration of the SOL because there is no relationship between a state's statute of limitations (SOL) on enforcing a judgment for collecting a debt, and the data that appears on a credit report.

Most negative information stays on a credit report for seven years, even though in many states the statute of limitations runs out after three to five years.

So how do you remove a debt from your credit report after the statute of limitations has passed?

This is a fairly simple one, because the Fair Credit Reporting Act allows you to have old debts removed from your credit report, so if the SOL has expired, then you simply need to contact the credit agencies and ask them to remove it, and they will.

Hopefully you will now have a good grasp of how the Statue Of Limitations For Debt works, and will be able to use it to your advantage.

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