In today’s consumer-driven economy, with its many facets of “essentials”, expenses tend to pile up. As leisure time has opened up new opportunities to enjoy all that technology has to offer, the latest gadgets cost more and more, in keeping with supply and demand. Too, the cost of living has continued to rise– with job wages barely keeping up. This is a recipe for debt.
It’s always the honorable thing to do to pay off your debts, of course, but there may be situations in which you and your family have every intent of paying all of your outstanding balances, but, due to your being cash strapped, may need a little breather in order to catch up.
Perhaps you are wondering if debts you accrued early in life may be legally waived.
If juggling expenses and income is taking up a great deal of time—you simply don’t know where the money is going to come from—and you would like to examine your options in re: the paying of old debts, there are a few things that you need to know.
The Statute of Limitations for debts exists nationwide, and it varies from state to state—as do all rules and regulations governed by the state (versus the federal government).
Define the Statute of Limitations on Debt
The Statute of Limitations refers to the time frame after which a debt-collector, or the original creditor of a debt, may no longer issue a judgment against you. This is because, after the Statute of Limitations, the courts may no longer be used for the purpose of helping a creditor or debt collector continue to try to collect on an item.
How Do You Know When The Courts Start Counting For The Statute of Limitations?
It’s important to note that the time frame for this period is measured starting from the very last day that there was any account activity on that particular debt.
Oh, Right. When I Order My Credit Report, The Three Bureaus All Have a Credit Reporting Limit. Is The Concept The Same?
Good question. No, that isn’t the same thing at all. What you’re referring to is the Credit Reporting Time Limit . This is the maximum length of time, or the most time, that credit reporting bureaus (TransUnion, Experian and Equifax are three such bureaus) can report your delinquencies.
As you continue to receive these reports—and I assume you order the free copies we are all entitled to once per year—you’ll see that the delinquencies start to slip off after the seven year notch. This is when most delinquencies are taken off your credit report.
Is There a Body of Law That Dictates This Statute of Limitation Time Frame?
There is such a law, or an act, named the Fair Credit Reporting Act – also known as the FCRA– which was passed by the Federal government—specifically, the Federal Trade Commission, or the FTC. This Act is what gives consumers the right to order and examine their credit report, as well as to dispute incorrect or outdated information.
Great! So What’s My State’s Time Frame, as Far as the Statute of Limitations is Concerned?
The time frames vary widely, from three years at the lowest end of the spectrum to a whopping 15 years. (For example, the Statute of Limitations is 15 years for an Oral Agreement in Rhode Island).
See here for your specific state (you’ll have to scroll down to the bottom). As you’ll see, the categories for each state are Oral, Written, Promissory and Open. http://credit.about.com/od/statuteoflimitations/a/entirestatesol.htm
Note: the column entitled Open, for Open-Ended Account, has to do with any sort of revolving credit account. One such Open-ended account would be a credit card.
Are There Any Debts Which Are Not Protected Under my State’s Statute of Limitations?
Yes, there are. If you have taken out a federal student loan, you could still possibly face suit in a court of law if you are not paying it off. Other forms of debt which do not fall under a Statute of Limitation are income taxes, and child support.
OK. Is There a Law for How Debt Collectors Can Behave?
Yes. There is. First, you should keep in mind that, even if a Statute of Limitations has been reached in re: a debt, you will still owe it. The difference is that the creditor or debt collector will not be able to use the courts to force you to pay the debt.
The persons who collect debts for another company (your original creditors) are not owed the money in and of themselves. They are the third-party collecting agent. These collectors are charged with bringing in the monies owed the original creditor, and, after collecting a fee for themselves, with remitting the remaining balance to said creditor.
This applies even if the collector is, or claims to be, an attorney.
Some of the practices which a debt collector may not, under the FDCPA, engage in include:
- Phoning you before or after 8:00;
- Ignore a letter which you’ve sent in which you request no further contact; and
- Calling you at your place of employment—if you’ve specifically stated that your boss doesn’t like such calls to take place during work hours.
For the complete list of what a debt collector cannot do, see this link: http://credit.about.com/od/debtcollection/a/collectionlaw.htm
Do you feel that your rights have been violated? You may report the debt collector to the Consumer Financial Protection Bureau. Google the CFPB for their online form, or call (855) 411-2372.