How to Evaluate the Statute of Limitations on Debt

The statute of limitations on debt collection in every state exists to protect the consumer. To take advantage of the government protections available to you, you must stay informed. Don't wait until a collection agency files a lawsuit against you to begin researching the statute of limitations on your debts. Know them from day one.

Instructions

1

Know the difference between the statute of limitations on a debt and the reporting period of a debt. The reporting period of a debt is the amount of time that debt can remain on a person's credit report. This is seven years for negative tradelines and 10 years for bankruptcies and judgments. The statute of limitations on a debt, however, is the amount of time that a creditor has to legally file a lawsuit to recover a debt. The statute of limitations is usually much shorter than the reporting period.

2

Evaluate your state laws. The statute of limitations for debt is regulated by state. You can go to any search engine to find complete lists of the statutes for any state.

3

Beware resetting the statute of limitations. In many states, it is possible to "reset" your statute of limitations by making a payment.

4

Be wary of a lawsuit. Although a debt that is outside of the statute of limitations for your state is not legally enforceable, someone has to point that out to a court. Rest assured that the creditor will not be the one to do so. If you receive a notice that you are being sued on a debt that is outside the statute of limitations for your state, it is vital that you show up in court. You only need to demonstrate that the debt is too old to legally file suit over. It does not matter at this point if you can or cannot prove that you do not owe the debt. If you do not respond to the summons, the creditor will be awarded a default judgment and you will have to pay the amount owed plus court costs and fees. This happens frequently to people who are not aware that the statute of limitations is there to protect them.

5

File full cease and desist letters once a debt is past the statute of limitations. Cease and desist letters are sent to stop a collection agency from contacting the debtor. Usually these letters are partial cease and desist letters and prohibit phone calls only. When a debt has passed the statute of limitations, you may file a full cease and desist and prohibit all contact of any kind. People hesitate to file full cease and desist letters because once a collection agency has no method of contacting a debtor they are more likely to sue. In the case of a debt that has already passed the statute of limitations, this is much less likely and if a debtor knows its rights, impossible to win.

6

Keep proof that a debt has passed the statute of limitations for your state. Collection agencies have been known to commonly "re-age" debts to place them back into statute or allow them to sit around on a debtor's credit report for longer than they should. Monitor your credit reports to prevent this.

7

Watch out for tolling. If you move to another state before your debt has passed the statute of limitations, your debt will be "tolled." What this means is that the statute of limitations clock will stop ticking in your old state and start ticking in your current state. For example: The statute of limitations is three years in Alabama and four years in Georgia. You accrue a debt in Alabama in 2000. In 2001 you move to Georgia. Instead of your debt timing out in 2003, it will now take an extra year for the statute of limitations to be up. Say you don't remain in Georgia and that you move back to Alabama in 2003. You'll still have two more years to go to reach the statute of limitations on that debt. Alabama will not count the time you were living outside of the state as "time served" for the statute of limitations. Most people do not have to worry about this since smaller debts rarely get tolled in time to make a difference. Governments tend to be incredibly slow about things like this. For legal reference, however, it is good to know. This too, depends on state regulations so check your state. Some states do not toll debts at all.