Under Florida law, a consumer can only be sued for an outstanding debt for a set period of time. The exact amount of time a creditor has to sue a debtor will depend on the type of debt the person has taken out. In the case of payday loans, which are secured by a written contract, the creditor has five years to sue the debtor for repayment of the debt.
Payday Loans
A payday loan is a type of unsecured loan. Typically, payday loans are short term --- in Florida, they must be repaid within a month --- and carry high rates of interest. A payday lender requires all borrowers to sign a contract agreeing to pay back the loan within a certain period of time. If he doesn't the borrower will be held liable for the debt and can face a lawsuit in court.
Debt Collection
While a payday loan lender can attempt to collect the debt by contacting the debtor and reminding him of his obligation, he cannot undertake more aggressive methods until after a judge has awarded him damages in court. This can only be done if the lender files suit alleging that the borrower hasn't paid the amount that he was contractually obligated to. This lawsuit must be filed, but not necessarily won, before the statute of limitations has expired.
Statute of Limitations
In Florida, all creditors must file lawsuits for any uncollected debt that stems from a written contract within five years from the date in which the debt went bad. This means the five-year period starts the day the borrower missed his first payment on the debt. After the five-year period has elapsed, the borrower still technically owes the payday lender the money, but it may be difficult to collect.
Considerations
If a creditor does win a lawsuit against the payday borrower, then the creditor will be awarded what is known as a "legal judgment" in his favor. This legal judgment has a different statute of limitations for its collection. In some cases, a judge may be willing to extend this statute of limitations past its deadline. It is rarer for a Florida judge to extend the statute of limitations on the filing of a lawsuit over a written contract.
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