If you have just received a threatening letter about an old debt, check the date of the debt before making a payment. All states, including California, have a statute of limitations on using the courts to collect a debt. Depending on the type of debt, you may no longer be legally obligated to pay it off, and a debt collector cannot legally threaten to sue you.
Statute of Limitations
According to legal publisher Nolo.com, a statute of limitations is the legal time limit on filing a lawsuit. In California, creditors have anywhere from two to four years to file a lawsuit to collect a debt.
Types of Debt
California's statute of limitation laws differ according to the type of debt that the creditor wishes to collect. For example, if there was no written agreement between you and your creditor, the statute of limitations is two years. If a written agreement was used, the statute of limitations is four years. If a lawsuit was filed and won by the creditor, the statute of limitations on collecting the debt (including getting a lien on your property, seizing your assets or garnishing your wages) is 10 years, but is also subject to renewal at the request of the creditor.
Credit Reporting
It is important to understand that there is a difference between the statute of limitations and limits on how long negative items can be placed on your credit report. According to federal law, negative items can remain on your credit report for only seven years after the account becomes delinquent. Because of this, your creditor can no longer sue you for the debt, but it can still report the debt to credit bureaus.
Collection Efforts
The statute of limitations does not preclude ongoing collection efforts by your creditor. Even though your creditor cannot sue you once the statute of limitations has passed, the agency can still try and persuade you to pay the debt.
Zombie Debt
Unfortunately, there are some companies that specialize in what is known as "zombie debt," very old debt that is no longer collectible under the statute of limitations. These companies, also known as "debt scavengers," will buy up old debt for a fraction of its face value, then try and intimidate you into paying it. If you are contacted by one of these companies, check the date on which the debt went into default. If it is older than the statute of limitations allows, send the collector a stern letter via certified mail that informs them that the debt is past the statute of limitations and that they are not to contact you ever again.
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