Statute Of Limitations On Debts


A statute of limitations is a statute in a common law legal system that sets forth the maximum period of time, after certain events, that legal proceedings based on those events may be initiated.

Why should you care about the Statute Of Limitations if you have a account in collections

The reason is that consumers pay off collection accounts and charge-offs which they do not have to pay off because the Statute of Limitations has already expired for the account. Consumers pay off those accounts because the accounts still show up on their credit reports. People also pay off these accounts when they are not even on their credit report because it was already removed by the credit agency. This information can be a good tool for getting rid of old debts. Creditors only have a limited time in which to sue you under law. The Statute of Limitations law starts from the day the debt or payment on an open ended account was last due.

How does the Statute Of Limitations affect my credit report

The Statute Of Limitations and your credit report are totally different from one another and has nothing to do with the length of time debt can stay on your credit report.

The law states: A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. There is no time limit on reporting information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you've applied for more than $150,000 worth of credit or life insurance. Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer.

What to do if you are contacted by a creditor and the debt expired under the Statute Of Limitations

The only thing you need to say to the collector is, "I have an absolute defense because under the Statute of Limitations, the debt has expired."

Just remember that The Statute of Limitations does not cause your debt to disappear after it has expires. If a creditor files a civil lawsuit, the person has an absolute defense to use against the creditor in court. They must present the new evidence in the court to avoid a potential judgment. You file the proper papers to the court to support the claim of a absolute defense. If the creditor tries to sue ,in a court of law and you do not prove to the court that the Statute of Limitations has expired, then you will have automatically lost lawsuit and a judgment will be issued against you.

Please Note: The Statute Of Limitations applies to oral contracts, written contracts, promissory notes, open ended accounts and judgments. The time it takes for a debt to expire under the Statute Of Limitations varies from state to state and also depends on what state the debt was signed in and where you currently live. Check your current state laws on the Statute Of Limitations and be sure to consult a attorney for legal advice before taking any action.