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The Statue Of Limitations On Debt - Step-By-Step by Michael Redbourn

The first and perhaps the most important thing to understand about the Statute Of limitations On Debt, is that although debt collectors and creditors are allowed to contact you about a debt that you still owe forever, they can only sue you for it for a certain amount of time.

The amount of time varies from state to state, and some state's limits are as little as three years whereas others are as high as six years.

We shall use S.O.L in place of Statute Of Limitations from here on in, to make for easier reading, and typing :-)

Is A Debt Still Owed After The SOL Has Expired?

In essence, the only things that can nullify your obligation to pay a debt are,

a) A cancellation from the creditor.

b) Discharge in bankruptcy.

c) Payment of the debt.

What this means is that even after the statute of limitations has expired on a debt, you are still legally responsible for paying the debt.

But neither the creditor nor collector can use the court to make you pay it!

A very common question is,

Can I Be Sued For A Debt After The Statute Of Limitations Has Passed?

And the simple answer is "yes".

Because, although the SOL limits the time a creditor or collector can use the court to force you to pay a debt, it doesn't stop creditors and debt collectors from trying to collect the debt from you.

The lender can sue you, but if you're able to prove that the SOL has been exceeded, then you won't have to pay. You should send a cease-and-desist letter, which is a letter demanding that the recipient refrain from a certain behavior or face legal action.

When Exactly Does The SOL Start?

Due to the somewhat ambiguity of the law, the collection agency will state one date, and you will claim another.

According to law, the statute of limitations clock starts running from the date of the last activity on your account!

This could be,

a) The date you last made a payment.

b) The date of a "promise to pay" agreement.

And very importantly,

c) A date when you acknowledged liability for the debt.

Can The SOL Clock Be Reset?

Yes, and this is very important!

It is possible for the clock to be restarted and it could be very damaging to you, but it can only be restarted if you make a blunder.

So after your debt is covered by the SOL you must never,

a) Acknowledge that you owe the debt.

b) Make more payments.

c) Enter into some kind of payment plan.

d) Make an agreement to pay.

e) Make a charge on the account.

Certain Debts Are Never Covered By The SOL

a) Federal student loans.

b) Child support in some states.

c) And income taxes, of course.

Why is a debt showing on my credit report after the SOL has expired?

It's quite likely that an expired debt will still be showing on your credit report, after the expiration of the SOL because there is no relationship between a state's statute of limitations (SOL) on enforcing a judgment for collecting a debt, and the data that appears on a credit report.

Although the statute of limitations expires after three to five years in most states, nearly all negative information is likely to remain on your credit report for seven years.

So how do you remove a debt from your credit report after the statute of limitations has passed?

This is a fairly simple one, because the Fair Credit Reporting Act allows you to have old debts removed from your credit report, so if the SOL has expired, then you simply need to contact the credit agencies and ask them to remove it, and they will.

Hopefully you will now have a good grasp of how the Statue Of Limitations For Debt works, and will be able to use it to your advantage.


About the Author

The author of this article was a film producer, and award winning film sound editor for many years. He has long been interested in finance and economics, and one of his websites -> http://home-loan-help.org has a large number of very popular articles about the world's economy in general, and bad debt loans, debt settlement, debt consolidation, and bankruptcy in particular.


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