Statute of Limitations On Debt Collection

Sometimes, despite your best efforts to keep your financial obligations organized, there are things that simply fall through the cracks. Perhaps you have a payment owed to the doctor’s office that wasn’t covered by your insurance or a bill that you never received that went unpaid. In some cases, you may have actually paid the debt but the payment was never recorded properly. Or maybe you just don’t have the money to pay the bill. Whatever the circumstance, it is important for everyone to understand there is a Statute of Limitations on debt collection activities. This can help you when dealing with aggressive debt collection efforts for debts that you owe or those you believe you do not owe. Here are some commonly asked questions regarding the Statute of Limitations (SOL) on debt collection.

• What does Statute of Limitations mean? Many people believe that the statute of limitations is the amount of time when a debt can be legally collected. This is not the case, past due debts can always be the target of collection activity. The party collecting the debt is limited however to how long they can pursue legal action to enforce a past due debt. In short, if you owe a debt, that debt can and will most likely hang around for years to come. You can only be sued in court for the payment of that debt for a certain number of years. After the SOL has passed, you have a legal defense in a court of law.

• What is the SOL on credit card debt? The statute of limitations varies from state to state, therefore you must determine what the SOL is in your state of residence. A general guideline is 3-6 years for credit card debt.

• Why happens if I make a payment on a past due account? In many cases, increased collection activity begins once the SOL is about to expire. It is very important that consumers understand, making an agreement to pay or sending a payment in many cases will restart the clock on the SOL. If the debt is valid and you intend to repay the debt, then making the payment arrangements will help remove the unpaid debt from your credit report, but it will also start the SOL over again.

• Is there a SOL for all debts? There is not a SOL on all debts, for example federal student loans, fines, child support and taxes are a few debts that often do not have a SOL. This may vary from state-to-state and individual circumstances, therefore it is important to research the SOL for each situation before counting on it as a legal defense.

• When does the SOL start? In most cases the SOL begins with the last activity on the account. If the SOL is 4 years in your state, then the clock begins after the last activity on your account, such a payment or agreement to make a payment.

Understanding how the SOL works in your state can give you a legal defense if you are sued for a debt once the SOL has passed. By learning as much as you can about the SOL you can avoid paying a debt once the time period has passed, however you must remember that does not make the debt disappear. It is recommended you make every effort to repay past due debt to preserve your credit history and score.