A Minnesotan's last payment on a debt affects a state law that determines if residents can face a collection lawsuit filed by a creditor, lender or debt collector. In some cases, old credit card accounts and other debts that consumers have long forgotten about can legally be targeted for collection lawsuits.
Minnesota Statute
Creditors and lenders have a limited amount of time to file lawsuits to sue Minnesota residents to collect debts. The state statute of limitations outlines that time limit. The statute gives creditors and lenders six years to sue residents to collect credit card debts and other debts that involve written and oral contracts. The statute doesn't keep debt collection companies from trying to collect legitimate debts, but a company can't legally sue a resident to recoup a debt after the statute of limitations has run out.
Account Activity
Get a copy of your credit report to determine the date of last activity on a debt, which will help you figure out whether the statute of limitations has expired. MSN Money article "Is There a Statute of Limitations on Debt?" says the date of last activity generally is the last date on which you made a payment on an account. For credit card accounts, the date of last activity also may be determined by the last purchase date if it's later than the last payment date. People who file lawsuits involving debts based on oral contracts may not be able to prove they can legally sue to collect the debt if they can't document the date of last activity.
Age of Debt
Minnesota residents should add six years to an account's date of last activity to determine whether a debt is too old for a creditor or lender to sue to collect it. In any case, the MSN Money article notes that some debt collection companies may violate the U.S. Fair Debt Collection Practices Act and sue to collect debts even after the statute has expired. In such cases, you may need to hire an attorney to protect your rights and keep a collector from using illegal practices to recoup an old debt.
Paying Old Debts
Minnesotans who want to pay off an old debt should first ensure they can afford to pay the debt in full to avoid a potential lawsuit. You could inadvertently reset the statute of limitations on an old debt by sending a partial payment to a collector, since your last payment date affects the statute's expiration. Ultimately, a court may decide that a collector has the right to sue to collect full payment on an old debt because a consumer's partial payment restarted the statute of limitations. In essence, a partial payment can make an old debt new again.
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