Actions to collect a debt involve a creditor (the person seeking payment) and the debtor (the person owing the debt). Each state has its own laws that govern creditor-debtor actions. State laws vary. Creditor-debtor actions in Ohio must take into consideration specifics such as the usury limit and the statute of limitations.
Debt Collection Actions
In Ohio, as in other states, the Fair Debt Collection Practices Act (FDCPA) governs collection actions. In general, this act prevents creditors from harassing debtors into paying a debt. If a creditor sues you, Ohio law contains some protections. According to the Ohio Legal Services website, debtors may protect up to $3,225 for a car or up to $1,075 in personal property. While you may be able to protect your car or personal property up to the exemption amount, creditors may pursue other collection methods, such as wage garnishment.
Usury Laws
Usury laws prevent certain lenders from charging an illegal interest rate on loans. In general, the laws primarily affect private loans between individuals. In Ohio, it is illegal to charge an annual interest rate greater than 8 percent. According to JRank.org, a legal information website, Ohio courts may apply the excess interest paid to the principal on the loan.
Statutes of Limitation
Like other lawsuits, debtor-creditor actions have a statute of limitation. The statute of limitation is a deadline for bringing a valid lawsuit. In Ohio, two limitation periods apply. Debts based on a written contract have a 15-year statute of limitation. Oral contracts and actions for debt on account (such as a credit card debt) have a six-year statute of limitation.
Other Issues
Despite Ohio's usury limits, consumers may notice a higher interest rate on certain debts, such as credit card debts. Usury laws allow certain agencies, such as credit card companies, to use the usury laws in the state where the business has its principal office. Companies may incorporate in states that have a higher usury limit than Ohio; this enables the company to charge a higher rate. Because of the legal nature of debtor-creditor actions, readers should consult an attorney before proceeding.
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