Debt Collection Threats: How the Statute of Limitations Can Protect You
There is a lot of confusion when it comes to time-barred debt and the statute of limitations concerning old debt. One of the reasons for the confusion is that many debt collection agencies have renewed their efforts to collect on very old debt, and consumers simply don't know what their rights are, what steps the debt collectors are allowed to take in order in to collect the debt, or how to deal with a collector on this type of debt. Here are the basics that you need to know when it comes to old debt.
What is Time-Barred Debt?
Every state has certain guidelines that regulate how long a debt collection agency can take the consumer to court. For instance, in some states, a consumer can't be sued for a debt that's five years old, on others the limit is seven years. This doesn't mean that the collection agent can't attempt to collect the debt - it simply means that some avenues are no longer available to them.
The Fair Debt Collection Practices Act sets down guidelines that every debt collector must follow, and one of those rules is that they aren't allow to threaten you with something that they have no legal right to do. If a debt collector threatens to sue you for a debt that is past its statute of limitations, they are in violation of the law, and that gives you the right to sue them in a court of law.
Is the Statute of Limitations the Same as Credit Report Time Limits?
There is a lot of confusion between the statute of limitations on an old debt, and the amount of time that the credit reporting agencies can report a bad debt. In actuality, the two don't have anything to do with each other. A credit reporting agency can keep a bad mark on your record for seven years (and ten in some instances), but the statute of limitations varies state by state. In addition, each type of debt can carry a different statute of limitations. That's why it's important for you to understand what the time-barred debt rules are in your state.
Will the Statute of Limitations Last Forever?
The bad news is that the statute of limitations on a debt can be started over if a consumer makes a mistake when dealing with a debt collection agent. For instance, if you pay even a small amount on the debt, it will reset the clock, and the statute of limitations will start all over again. In some states, simply acknowledging that you owe the debt will start the clock again.
Because of this, it's wise to only communicate with a debt collection agency in writing. Never agree that you owe the debt, and never make a payment unless your intent is to pay off the debt. Debt collectors who collect on old debt understand the rules, and have been trained to make you do or say something that will restart the clock on your debt. Don't be tricked - instead, keep the upper hand by refusing to communicate with them over the phone.
What is Time-Barred Debt?
Every state has certain guidelines that regulate how long a debt collection agency can take the consumer to court. For instance, in some states, a consumer can't be sued for a debt that's five years old, on others the limit is seven years. This doesn't mean that the collection agent can't attempt to collect the debt - it simply means that some avenues are no longer available to them.
The Fair Debt Collection Practices Act sets down guidelines that every debt collector must follow, and one of those rules is that they aren't allow to threaten you with something that they have no legal right to do. If a debt collector threatens to sue you for a debt that is past its statute of limitations, they are in violation of the law, and that gives you the right to sue them in a court of law.
Is the Statute of Limitations the Same as Credit Report Time Limits?
There is a lot of confusion between the statute of limitations on an old debt, and the amount of time that the credit reporting agencies can report a bad debt. In actuality, the two don't have anything to do with each other. A credit reporting agency can keep a bad mark on your record for seven years (and ten in some instances), but the statute of limitations varies state by state. In addition, each type of debt can carry a different statute of limitations. That's why it's important for you to understand what the time-barred debt rules are in your state.
Will the Statute of Limitations Last Forever?
The bad news is that the statute of limitations on a debt can be started over if a consumer makes a mistake when dealing with a debt collection agent. For instance, if you pay even a small amount on the debt, it will reset the clock, and the statute of limitations will start all over again. In some states, simply acknowledging that you owe the debt will start the clock again.
Because of this, it's wise to only communicate with a debt collection agency in writing. Never agree that you owe the debt, and never make a payment unless your intent is to pay off the debt. Debt collectors who collect on old debt understand the rules, and have been trained to make you do or say something that will restart the clock on your debt. Don't be tricked - instead, keep the upper hand by refusing to communicate with them over the phone.