Writing off debt is an accounting practice used by creditors that is commonly referred to as a "charge-off." The legal enforceability of the debt is unaffected by this practice regardless of when it occurs. The statute of limitations is the legal deadline by which a creditor must file a lawsuit to enforce a debt or its right to sue on the debt is lost forever. Like all states, Oklahoma law provides a statute of limitations regarding debts that is unaffected by a creditor's charge-off of the debt.
Charging Off Delinquent Debt
A creditor typically charges off a debt between 180 and 240 days after it first becomes delinquent -- that is, no further payment has been made on the account. This does not mean that the debt is uncollectable or forgiven. The creditor can attempt to collect the debt or assign it to a collection agency. The charge-off will most likely appear on the debtor's creditor report and can remain there for as long as seven years.
Statute of Limitations for Debts
Oklahoma law specifies a statute of limitations for debt that is generally three or five years depending on the basis for the debt. A debt incurred on a written contract cannot be sued on five years after the debt becomes delinquent. Oral contracts cannot be sued on after three years. The limitation period for open-end accounts, such as credit cards, is not always clear. If the account is based on a written contract it is five years; if not, it is three years. Also, in some situations, a credit card agreement might specify that the laws of another state apply, which may have a limitation period longer than five years.
Judgments
A creditor who files a debt collection lawsuit before the statute of limitations expires can obtain a court judgment for the debt. As a practical matter, the statute of limitations to collect the debt restarts on the date of the judgment. The limitation period to collect an Oklahoma judgment is generally five years. This limitation period can be affected by several factors, such as the creditor's obtaining a writ of execution from the court to garnish wages. A creditor can also apply to the court within the five-year period to renew the judgment and extend the limitation period another five years. However, once there has been a five-year period of inactivity on the judgment, it can no longer be enforced.
For judgments made outside of Oklahoma -- called foreign judgments -- that are confirmed as a judgment by an Oklahoma court, the limitations period is three years.
Affecting the Statute of Limitations
Although the Oklahoma statute of limitations has expired on a debt, it may still appear on the debtor's credit report as a charge-off. Also, the expiration of the statute does not prevent a collection agency from contacting the debtor about payment of the debt. However, the debtor's conduct can affect the statute of limitations once it has expired if he is not careful in his dealing with the creditor or collection agency about the debt. For example, if the debtor makes any payment on the debt, the statute will run again from the date of that payment. If the debtor signs any document acknowledging the debt is valid, this can revive the statute as well. Debtors must be aware that collection agents may attempt to revive an expired debt by either of these means.
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