The devil’s in the details. Not only do states have different statutes of limitations for different debts, but two states may treat the same debts differently. A credit card debt might be considered an open-ended account in one state and a written contract in another. The only way to know for sure is to check your state laws or consult an attorney.
You can inadvertently restart the clock. Generally, the statute of limitations starts ticking from the “date of last activity” on the accounts, said Los Angeles bankruptcy attorney Scott Bovitz. (If the account is still listed in your credit reports, the date of last activity should be noted there.) On a credit card debt, that could be the last payment you made or the last purchase you charged. But in some states, making a payment on an old debt, agreeing to an extended repayment plan or even acknowledging that the debt is yours can extend the statute of limitations or restart the clock.
A creditor may still sue you after the statute of limitations has run out. Suing or threatening to sue you after the statute of limitations has run out violates the Fair Debt Collection Practices Act, but that doesn’t mean it doesn’t happen. To prevent the creditor from winning a judgment against you, you’ll need to show up in court and point out that the statute has expired.
The creditor may try to pick a better venue. If you sign a credit contract and move to a state with different limits, the creditor may try to sue you in the state that has the longer statute. If that’s not the state in which you now live, you should protest, because generally the state where you reside is the one whose statutes should apply.
Debts can still exist even if the creditor can’t sue. Some people erroneously believe that debts are erased after the statute of limitations has run out. Although the creditor’s ability to sue you has been curtailed, it can still try other methods to persuade you to pay, including calls and letters. The debt can also be sold to another collector that can renew efforts to get you to pay. A legitimate debt is truly gone only when it’s paid or erased in bankruptcy court.
Collectors can’t legally restart the seven-year clock by “re-aging” the debt (giving it a new delinquency date) or by selling it to another agency. The Federal Trade Commission shut down one large collection agency, Capital Acquisitions and Management, after charging the company repeatedly had re-aged debts in its attempts to collect.
The devil’s in the details. Not only do states have different statutes of limitations for different debts, but two states may treat the same debts differently. A credit card debt might be considered an open-ended account in one state and a written contract in another. The only way to know for sure is to check your state laws or consult an attorney.
You can inadvertently restart the clock. Generally, the statute of limitations starts ticking from the “date of last activity” on the accounts, said Los Angeles bankruptcy attorney Scott Bovitz. (If the account is still listed in your credit reports, the date of last activity should be noted there.) On a credit card debt, that could be the last payment you made or the last purchase you charged. But in some states, making a payment on an old debt, agreeing to an extended repayment plan or even acknowledging that the debt is yours can extend the statute of limitations or restart the clock.
A creditor may still sue you after the statute of limitations has run out. Suing or threatening to sue you after the statute of limitations has run out violates the Fair Debt Collection Practices Act, but that doesn’t mean it doesn’t happen. To prevent the creditor from winning a judgment against you, you’ll need to show up in court and point out that the statute has expired.
The creditor may try to pick a better venue. If you sign a credit contract and move to a state with different limits, the creditor may try to sue you in the state that has the longer statute. If that’s not the state in which you now live, you should protest, because generally the state where you reside is the one whose statutes should apply.
Debts can still exist even if the creditor can’t sue. Some people erroneously believe that debts are erased after the statute of limitations has run out. Although the creditor’s ability to sue you has been curtailed, it can still try other methods to persuade you to pay, including calls and letters. The debt can also be sold to another collector that can renew efforts to get you to pay. A legitimate debt is truly gone only when it’s paid or erased in bankruptcy court.
Collectors can’t legally restart the seven-year clock by “re-aging” the debt (giving it a new delinquency date) or by selling it to another agency. The Federal Trade Commission shut down one large collection agency, Capital Acquisitions and Management, after charging the company repeatedly had re-aged debts in its attempts to collect.