Features And Dealing Techniques To Know Regarding Time Barred Debts
Posted: Aug 17, 2019
Just like there are different types of loans, debts can be manageable, difficult to pay and even time barred! Most people are unaware of this fact and do not know what to do when suddenly a debt collector calls them up for a loan account that they may have taken long time back.
Typically, if you have old debts in your name, a collector may not be able to file any lawsuit against you to collect on them. This is because there is a limited number of a year for the debt collector to do so to collect your dues. This time limit is called the statute of limitations.
If the debt collector fails to do so within that period of time, the unpaid debts against your name will be considered to be "time-barred." According to the law, you cannot be sued or harassed to pay any debt that is time barred by a debt collector.
The tricky part
However, things start to get tricky from here and there are several reasons for it such as:
- The statute of limitations varies from one state to another as well as for different kinds of debts
- Under certain circumstances this clock for time limit can be reset to start the calculation of time afresh.
As per the rules of the Federal Fair Debt Collection Practices Act, FDCPA, a debt collector who can be a collection agency, lawyer, and company but the term 'debt collector' does not include the original creditor.
It is for this reason the nation's consumer protection agency, FTC or Federal Trade Commission says that it is important for a consumer to understand their rights when a debt collector contacts them regarding an old debt.
The age factor
First you will need to know when a debt is considered to be too old for a collector to collect or file a lawsuit. Typically, it depends on the state laws. It is the state that determines how long the statute of limitations will last.
Normally, the time starts when you fail to make a payment but the time when it will stop will depend on two specific things such as:
- The type of debt and
- The applicable law of the state where you live.
It may also be specified in the credit contract. The usual statute of limitations for credit card debts is for three to six years but in a few states it can be as long as 10 years. You may find out the statute of limitations on different kinds of debts form an attorney, from a legal aid lawyer, or your State Attorney General's Office as well.
The statute of limitations for any debt may be quite different from the period of reporting for a debt on the credit report. In general, any negative information on your credit report will stay for seven years, at least.
When you start to get calls
You may start getting calls from the debt collector even for a time-barred debt as they are allowed to do so. They will contact you to tell that your debt is time-barred and they can and are going to sue you if you do not repay it. However, sometimes the debt collector may not tell you that your debt is time-barred. In such a situation if you think that it could be, you can ask the collector a couple of questions.
- You should ask if it has crossed the particular statute of limitations. According to the law, the collector needs to be truthful while answering to your question while some other can simply decline to answer.
- Another question that you should ask the collector if you think that the debt is time-barred is what records they have to show that the debt is collectible as well as the date in which you made the last payment.
These questions will play a significant role in determining the exactly when the clock of statute of limitations starts ticking.
However, if the collector refuses to provide you with any information you can send in a letter within 30 days after you receive any written notice of your debt. In the letter, mention that you are disputing the debt. Also make it clear that you want to verify their claims.
Be very specific and provide more information to the collector as to why you are disputing their claim. You will be better off and chances are that the collectors will stop calling you or collect it from you if they cannot give you proper verification report. If they do, keep the copy of the letter and verification safe.
To pay or not to pay
Whether you will pay a time-barred debt or not is up to you. However, each option will have its consequences. It is better to talk to a lawyer before you choose an option, whether it is debt settlement, bankruptcy or any other Pennsylvania debt relief option.
- You may pay nothing on the debt though the collector may continue to contact you and collect till you ask them to stop by sending a letter. Though they cannot sue you, not paying your debt will make it harder and more expensive to get future credit, insurance, or a home due to lower credit.
- You can make a partial payment on it and ‘revive’ the case starting the clock of statute of limitation once again. The collector can now sue you and ask you to pay additional interest and fees.
- You may be honest enough and pay off the debt even though the collector cannot sue you either in full or a reduced amount.
However, if you make any payment, make sure that you get a letter or a signed form from the collector before making any payment. It must state that when you pay you will be released from any further obligation. Without this letter, the amount you pay may be considered as treated as a partial payment and not a complete payment of the debt. Maintain a proper record as well.
Trudy Seeger is a editor and writer. He has worked with multiple publications over years and focuses on providing informative & educational material.Read more about great American eclipse here