Debt Statute of Limitations

The debt statute of limitations is determined by the state in which the debtor lives in and, therefore, can be different for each state.

By definition, the debt statute of limitations is the amount of time that the creditor has to file a lawsuit against the debtor to recover their money. A big distinction is that it does not prevent the creditor from trying to collect the debt, it merely prevents them from having the assistance of the courts to enforce its collection efforts. Many people are surprised to still be receiving phone calls and collection letters long after the debt statute of limitations for their loan has expired. But this is not illegal.

There are a certain class of debts to which the statute of limitations does not apply. Federal student loans are one such example. Another instance is federal income tax which is subject to federal laws and not state laws. Child support debts are another type of debt which varies among states but it does not necessarily correlate with the debt statute of limitations for normal debts. If the amount of debt is huge, the safest course of action is to check with an debt settlement attorney in your state who has extensive knowledge of debt law.

The states have various legal guidelines as to when the clock on the statute of limitations starts ticking. In the majority of cases, however, it starts from the time the debt first becomes late. Others start it from the point where the creditor first attempts to collect the past due amount.

It's important to know that the statute of limitations on a debt can be reset back to zero. The trigger that resets the clock can be making a payment, promising to make a payment, or returning to a state after having left it for a while. For example, assume that in your state the statue of limitations for a loan is 3 years. Two years have passed without you making a payment to the creditor. Then you come into some money and make an additional payment on the debt. In some states, with this act the statute of limitations has been reset, giving the creditor an additional 3 years before the statute of limitations has passed. Again, states vary as to how the determine the rules for the debt statute of limitations.

Note that the debt statute of limitations has no bearing on your credit report. In other words, if the statute of limitations on debt in your state is 2 years, the information could still be contained on your credit report for long after that.

Since the rules for debt statutes of limitations are state determined, its incumbent on your to learn the specific rules that apply in your particular state before making any decisions regarding a debt that is approaching the statute of limitations.

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