The Statue of Limitations for a Old Debt

The Statue of Limitations For An Old Debt
By Mary Guimont

A creditor will give a debt to a collection agency after they have tried to collect the debt and have failed to do so. When a certain amount of time has passed the debt is considered time-barred debt. This is when the statue of limitations have passed and the debt collector can no longer sue for it in court of law. The time before a debt becomes time-barred varies from state to state. The amount of time may be different also from what kind of debt it is. Credit card debt, statue of limitations may be longer then other debts that are in collection. That is because some states make the statue of limitation longer for debts that are binding in a written contract.


Stature of Limitations for Each State


If a collection agency calls and threatens you with a lawsuit when the stature of limitations has passed. They are in violation of the Fair Debt Collections Act.

What happens if I don't pay on a time-barred account?

You still owe on the debt and even though the collection agency may not be able to take you to court to collect. They can still  call you and ask for it to be paid. If you write a letter to the collection agency and ask then not to call you any longer by law they are not allowed to.

Beware, when making a payment to the collection agency if the debt is time-barred.

If you make a payment on a time-barred debt. The statue of limitations becomes void in some states and starts all over again. If you sign a promise to pay with a collection agency with a time-barred debt. The statue of limitations may start all over again depending on the state.

You may decide to pay the debt.

You may decide to pay the debt because even though they may not be able to take you to court over it. It still remains on your credit report as owed for seven years. If you decide to do this. The collection agency may be willing to accept less then is owed just to settle the account. If you do this before making a payment make sure you have this in writing from the collection agency.

What should you do if you are sued in court for a time-barred debt?

Bring in documentation that proves the debt is time-barred and it will be dismissed.

If you go decide to go bankrupt.

Keep in mind this when considering going bankrupt on old debts. A bankruptcy stays on your credit report for ten years. A time-barred debt stays on your credit report only seven years.