There is a restriction, known as the statute of limitations, on how long a creditor has to file a lawsuit against you in order to get you to pay a debt. This limit is different for each of your debts. If the statute of limitations on a debt has run its course and has passed, the obligation is no longer legally enforceable until the statute of limits is restarted.
Gain an understanding of the several ways in which statutes of limitations may be restarted, as well as the methods in which these scenarios can be avoided.
What Can Cause the Running of the Limitation Period to Begin Again?
Even if it is done by unintentionally, some activities might reactivate a dormant account and reset the clock on the statute of limitations for the obligation. It is important that you have a thorough understanding of the circumstances under which an old debt might be given new life in order to achieve your goal of reaching the statute of limitations. In most cases, you are considered to have reactivated the debt once you pay the debt, agree to pay the bill, or simply recognize the debt account. 2 Examples include:
- Making a payment, regardless of the amount,
- Putting together a payment schedule
- The act of agreeing to a settlement offer
- Coming to an agreement to pay back part of the loan
- Recognizing that you are responsible for paying a debt
- Adding a new transaction to the existing account.
In the event that the clock on the statute of limitations is reset, it begins counting down from zero again, and it applies to the total amount owed on the debt. This reset of the clock provides the creditor or collector with more time to pursue legal action against you in order to compel you to pay the debt.
When speaking with a creditor or a debt collector about your outstanding balance, you should proceed with extreme care. They can attempt to get you to say or do anything that would reset the period of time during which the statute of limitations applies. If you are unable to pay the debt or are reluctant to do so, it is often in your best interest to avoid communicating with your creditors about the matter.
How Long Does the Statute of Limitations Require a Claim to Be Filed?
The particular statute of limitations that applies to you will be determined by both the state in which you now reside and the state in which the debt was committed by you. It is in your best interest to speak with an attorney in your region who specializes in debt law, although the statute of limitations in the majority of states is anywhere between three and six years.
In most cases, the clock on the period covered by the statute of limitations begins ticking on the day when the account was inactive for the first time. It’s possible that it’s even later than that, depending on the kind of activities you’ve been doing in the most recent period of time. As long as you don’t make any changes to your account, the statute of limitations will keep ticking away regardless of what you do.
Credit Reporting and the Statute of Limitations for Claims
The time restriction for credit reporting is often seen as a separate entity from the statute of limitations. You cannot depend on the information included in your credit report to keep track of the time restriction that applies to your debt. Your credit report can only include negative information for a maximum of seven years, and nothing, not even making a payment on the account, may cause this time limit to be reset or restarted. Your communications with creditors or debt collectors, as well as any verbal agreements you may have reached with them, will not be included on your credit report.
There are several states that have statutes of limitations that are much longer than the national average, which is around six years or fewer. There are certain debts that, depending on the state in which you reside, may be removed off your credit report before the statue of limitations has run its course. In certain circumstances, debts may continue to be shown on your credit report even after the applicable statute of limitations has passed.
To a significant extent, you will need to depend on your records in order to assist you in keeping track of the applicable statute of limitations for a debt. Maintain an accurate record of the dates on which payments and notifications about your obligations are due. Because of this, you will have a better understanding of the timeline of the statute of limitations.
It’s possible that a debt collector may tell you that the statute of limitations has passed and that the debt is thus no longer legally enforceable. You have the option of questioning them if they do not provide you with this information. The debt collector is not obligated to respond, but if they do, they are required to answer honestly regardless of whether or not they want to answer. However, having this discussion may be risky since it requires you to tread a delicate line between inquiring about the debt and acknowledging that you are responsible for paying it.
It is possible for the statute of limitations to change depending on the kind of debt.
The statutes of limitation that apply to certain sorts of accounts might vary from state to state, depending on the laws that govern those states. In certain places, the statute of limitations for filing a lawsuit to collect on a written contract is far longer than the statute of limitations for filing suit to collect on a credit card debt. If you want to know where you stand with the specific debt you’re concerned about, you should look up the relevant legislation in your state.
Are my creditors obligated to inform me that the statute of limitations for their claims has been reset?
Even if they don’t tell you immediately away, creditors who make notes on your account may realize that you’ve done anything to restart the clock on your debt, even if you won’t get news that the statute has resumed.
When a debt is contested, does the clock start again on the statute of limitations?
When you dispute the debt, it indicates that you recognize its existence but assert that the amount owed is inaccurate for one reason or another. When you admit that the debt is your responsibility, the clock on the statute of limitations may be reset.