Statute Of Limitation On Debt
Debt is something that befalls us all at some point in our lives for various reasons, and while some reasons may be due to just overspending or overindulging, a lot of cases of debt are due to people genuinely not being able to earn enough to cover unplanned emergencies or even just basic living expenses. If you are currently in arrears, for any reason, be assured that you are not alone, it is estimated that eighty percent of Americans are currently in debt to some degree.
Some arrears you have may be able to be paid off quickly or with small payments over a long period of time meaning that there is very little extra financial pressure on you as you balance the account. However, other debts are too large, they are too much of a burden, and it’s not possible to keep up with the payments or deal with it until the end, and the debt is left untouched. If this is a situation you are currently in, then this article will be able to give you some practical information about the statute of limitation on debt and other related queries.
How Long is the Statute of Limitation on Debt?
The statute of limitations of your debt relates to the amount of time that needs to pass in order for the arrears to no longer be your responsibility, once the time passes you aren’t legally obligated to pay the money back anymore. However, keep in mind that is it your responsibility to keep a track of your debt and keep proof of the account expiring, because if a creditor wants to take you to court after the time lapses, the court will not have this information on you. Once a debt goes beyond the time frame, it is referred to as a time-barred debt, and again, you cannot be sued as long as you can show the time has passed – it’s best to keep this proof for years after just in case.
The number of years that debt needs before it passes the time limitations will depend on two things; the first thing is which state you are in, each state has its own laws and regulations, and the second is what type of debt it is. There are four types of debt – written contracts, oral agreements, open-ended accounts, promissory notes – and you will need to know what type yours is so you can get an accurate answer to how many years you need.
At the link below, you can find a fully comprehensive list of the number of years that comprise the statute of limitations for each type of debt for each state. Have a look through and see how many years are relevant to your situation and your location – (https://www.moneymanagement.org/blog/understanding-the-statutes-of-limitations-on-debt)
Can You Be Sued After the Limitation Has Passed?
While any company is not legally allowed to sue you after the time limit has passed that doesn’t mean they won’t still try. If you receive a court order as a result of being sued, there are two things you must do without fail. Firstly, make sure you have proof that the debt has expired, you can use anything from a record of the time you last made a payment or even the letters and communications you have received from the company over the years that show you have not been responding, it’s paramount that you have proof the arrears have expired. Some companies will try to sue on the off chance you are not prepared or cannot prove otherwise, don’t rely on your credit report reflecting the expiration, credit reports are often not updated automatically once the limitation has been reached.
Secondly, you must make sure you actually turn up to the court at the date and time specified, even if the limitation has passed, and you know that the company cannot legally sue you, you must still go so you can present the evidence for it. Ignoring the letter, or not attending the court to provide your defense, could result in some serious legal trouble for you, or you may end up being liable for the debt again, so whatever you need to do, just make sure you go.
How to Ensure the Limitation Passes?
Quite frankly, the way to ensure that the time passes and you are no longer responsible is to not make any payments, or even acknowledge the debt. If you have made payments in the past, the clock will start counting down from the last payment you made, and likewise, if you contacted the company, spoken to them, or talked about it with them, this is classed as an acknowledgment, and the clock begins from the time you previously acknowledged it.
Are There Any Debts That Are an Exception to the Statute of Limitations?
No, there are no exceptions. Sometimes you may hear people say that medical debt is exempt from the debt collection rules, but it’s not. Medical debt follows the same rules and legal processes and any other type of it, and you cannot be sued for collection after the right period of time has passed, although like with other kinds of debt, you can be sued for the amount prior to the time frame passing.
Even though debt can easily leave you feeling so overwhelmed, so defeated, or even ashamed at times, just know that it’s nothing to be ashamed of, and rightly or wrongly, the vast majority of the population is in the same boat. Of course, paying off the bill is always the best option if possible, not paying them can create its own set of problems or stresses for you. However, we are not here to judge, we know that everyone’s circumstances are wildly different, and simply paying off the debt is much harder than it sounds. So, if you’re having problems with your bills or accounts with various companies, hopefully, you can leave here feeling a little better about your understanding of the whole situation.