If you’ve ever been in financial trouble and dealt with the seemingly endless collection calls, you may have wondered when the incessant phone calls would stop. Collecting unpaid debts DO have an expiration date as far as how long the court can be used to force you to pay the debt. The time period starts on the account’s last date of activity and varies by state.
Debt collectors have a limited amount of time in which to sue to collect a debt. The determining factor is the statue of limitations of the state in which the debt was incurred and the type of debt. Once the time runs out, the unpaid debt is considered ‘time-barred.’ This doesn’t mean you no longer owe and collectors can continue to pursue collecting the debt, but they cannot sue or threaten to sue on a time-barred debt.
Type of Debt
With fifty different legal stands on the issue, along with the various interpretations of those laws by different judges, the status of your past-due debt may be difficult to comprehend. In addition, there may be even subtle differences in the law that governs credit card debt as opposed to a written contract.
There are four categories of debt with different time limits and requirements:
- Written loan contracts include terms and conditions agreed to by borrower and lender.
- Revolving loans are open-ended and allow the borrower to repay and borrow a limited amount; they include rent-to-own and credit cards.
- Promissory agreements are in writing and include a set payment amount for a specific period of time at a predetermined interest rate.
- Oral contracts were once called ‘gentlemen agreements.’ The contract is a verbal agreement to pay back money with nothing in writing.
Admitting the old debt is yours could also restart the statue of limitations and extend the time the debt collector can file a lawsuit to collect the old debt. If you make a small payment, make a charge using the account, enter a payment agreement or promise to pay on the debt, you could restart the clock on the debt.
It’s important to note that when debt is sold and resold the account documentation is often skimpy. So if you question the validity of the debt as yours, dispute the claim by sending a certified letter. If you determine that the debt is yours, before you agree to pay an old debt, first make sure the statute of limitations hasn’t expired. If you are certain the statute of limitations has expired, you can use that fact as justification that you do not have to pay the debt.