During the recession, between 2008 and 2010, the U.S. economy lost over 8.4 million jobs, according to the Bureau of Labor Statistics. Between job losses, the rapid decline in home prices and the loss in value of millions of Americans' stock portfolios, many individuals are simply trying to stay above water. A consumer facing hard times in Pennsylvania needs to be aware of his rights when it comes to the statute of limitations on bad debt.
Pennsylvania Statute of Limitations
The statute of limitations is the amount of time a claimant has to pursue legal recourse against you. Once a debt is outside the statute of limitations, you cannot be sued for it in a court of law. The clock starts ticking on the date of last activity, which is usually the last time a payment was received. In Pennsylvania, the statute of limitations is six years for written contracts, four years for promissory notes, four years for oral contracts and six years for open accounts, which is the category that credit card debt falls into.
Debt Re-aging
It is a common practice in the collections industry to re-age a debt. Re-aging means that when you take an action on an old account, that action causes the date of last activity to change. This can cause your statute of limitations to reset back to zero and start all over again. If you make a payment or even just acknowledge that an old debt is yours, the statute of limitations could start all over again. Consumer advocates recommend that you should avoid acknowledging old debts so that you do not accidentally cause your debt to re-age.
Time-barred Debt
A "time-barred debt" is one that is outside the statute of limitations. Once the window of the statute of limitations has closed, a debt collector can no longer sue you for payment of this debt. While you will still owe this debt, you cannot be taken to court to be compelled to repay this debt. If you receive a summons for a debt that is outside of the statute of limitations, it is very important that you show up to court and let the judge know that the debt is now time-barred. While a debt collector can still attempt to collect a delinquent debt that is outside the statute of limitations, you cannot be sued in court or have your wages garnished.
Statute of Limitations and Your Credit Report
While bad debts that are outside the statute of limitations can no longer be litigated, they will still remain on your credit report. Delinquent debts usually stay on your credit report for up to seven years after the date of last activity. Consumer advocates recommend getting a copy of each of your credit reports from the three credit reporting agencies. Knowing where you stand is the first step to exercising your rights as a consumer.
Fair Debt Collections Practices Act
If you are struggling with delinquent debt, you should become familiar with the protections that you are entitled to under the Fair Debt Collections Practices Act of 1977 (FDCPA). The FDCPA outlines the rights of consumers when dealing with third party debt collectors. This federal law spells out what collectors can and cannot do when they are trying to collect a bad debt. The FDCPA prohibits debt collectors from being abusive and threatening. The law also dictates the hours that debt collectors can attempt to contact you. Violations of the FDCPA are handled by the Federal Trade Commission.
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