Debt Expiration Laws in Massachusetts

Under Massachusetts law, a debt incurred is valid until repaid. However, a creditor that seeks to compel payment from the debtor through the legal process must take action in a timely manner or his right to sue "expires." The Massachusetts statute of limitations provides that a civil action to enforce payment of a debt owed must be filed in court within a specified period of time. Any action for repayment of delinquent debt that is filed beyond this designated period is considered time-barred and may be dismissed by the court.

Breach of Contract

Because a creditor/debtor relationship usually arises from the existence of a binding legal agreement, the applicable Massachusetts statute of limitations period is that established for breach-of-contract actions.

Six-Year Limitation Period

Massachusetts General Laws, Ch. 260, 2, provides a six-year limitations period for breach-of-contract actions. A creditor seeking to compel repayment of a delinquent balance owed must file his suit against a debtor within six years.

Computing the Limitations Period

For purposes of computing the limitations period for filing actions to recover debt owed, the legal cause of action accrues on the date the contract for repayment was breached. The six-year statute of limitations clock begins on this date and ends on the date a civil action is filed in the clerk's office in the appropriate district court.

Procedures

Pursuant to Rule 8(c) of the Massachusetts Rules of Civil Procedure, the statute of limitations is an affirmative defense and must be raised by the debtor/defendant in his answer to the creditor's complaint after it's filed in court. Once properly raised, the debtor/defendant can request that the court dismiss the action for the creditor's failure to comply with the statute of limitations timely filing requirements.

Considerations

The statute of limitations operates as an absolute bar to bringing a civil suit. Once it's determined that the civil action was filed in court beyond the designated six-year limitations period, the court must dismiss the action --- the creditor has no further legal recourse against the debtor. A civil action that's filed outside the relevant six-year limitations period doesn't extinguish the debt or render it invalid; it does, however, preclude the creditor from using the court system to compel repayment.

Read More

What Happens to Debts in Intestacy?

State probate laws govern how to handle and administer a decedent's estate after death. Legal obligations of the decedent, such as debts, must be taken care of. In general, after creditors receive required notification of the decedent's death, they must prove what is owed. If they creditors fail to do so within a certain amount of time (which varies by state), the debt is typically barred from collection.

Intestacy

When a person dies without a valid will, she has died "intestate." State intestate succession laws dictate how her property will be distributed. To begin the proceedings, a family member must petition the probate court. The court will appoint a personal representative and the personal representative must then notify the decedent's heirs and issue.

Heirs and Issue

In intestate succession, only the decedent's immediate family members have the potential for receiving some share of the decedent's estate. The decedent's immediate family members are the decedent's heirs and issue. "Issue" means individuals directly related by blood to the decedent, such as children and grandchildren. Typically, the estate is left to the decedent's surviving spouse. If there is no surviving spouse, it generally passes to the decedent's children and grandchildren. State intestate laws dictate the exact percentages and procedures for distributing the decedent's property.

Debts Owed to the Decedent

The decedent's heirs or issue may owe a debt to the decedent. Exactly how the debt is handled depends on the state's probate code. Under the Uniform Probate Code, the debt only affects the share of the debtor. If the debtor did not survive the decedent, then the debt is essentially extinguished; it is not charged against the debtor's children. For example, assume the decedent's property is to be distributed to his daughters A, B and C. C owed the decedent a debt; C's share may be reduced by the debt owed. If C is dead, but left two children (the decedent's grandchildren), the grandchildren's share would not be affected.

Debts Owed by the Decedent

Problems arise when a decedent owed debts at the time of death. State law dictates how debts are settled upon death. In Wisconsin, for example, the intestate shares do not pass to the heirs and issue of the decedent until after all outstanding debts have been paid. The personal representative of the estate must notify creditors that the decedent died. The creditors must then petition the court for payment of the debt.

Read More

What Is a Blended Interest Rate?

Blended interest rates approximate the overall interest rate of two different amounts being charged different interest rates. Mortgages or savings accounts may require calculations of blended interest rates.

Significance

Homeowners may have a first mortgage at a lower interest rate plus a second mortgage at a higher interest rate. The blended interest rate tells the homeowner what the interest rate would be if the two mortgages were combined.

Function

Blended interest rates allow people to compare different financing options. Knowing the blended interest rate on a first and second mortgage lets a potential buyer know whether it is a better deal than just getting one mortgage.

Calculation

A blended interest rate is a weighted average of the different interest rates involved. For example, someone may borrow $200,000 at 6 percent and obtain another $50,000 at 9 percent. The blended rate is $200,000 times .06 plus $50,000 times .09, all divided by $250,000, to get .066 or a 6.6 percent blended interest rate.

Online Tools

Some online mortgage calculators have features that include a calculation of the blended interest rate. Input the amounts and interest rates of each mortgage to calculate the blended interest rate.

Savings Accounts

Blended interest rates may also apply to savings accounts with promotional features. For example, an account may yield 4 percent interest for the first three months and only 2 percent interest after that. The blended rate would be .04 times 3 plus .02 times 9, all divided by 12, resulting in a 2.5 percent blended interest rate for the first year.

Read More

Credit Problems & Options

A problem with your credit can limit your options when you want to borrow money or increase the amount of interest the bank will charge you for a loan. In order to fix credit problems, you need to identify them and then find solutions you can manage on your budget. It may take time to fix your credit problems.

Too Much Debt

If your debt-to-income ratio is too high, it can lower your credit score. Banks may be unwilling to lend you money if you have too much debt. You can find your debt-to-income ratio by dividing the total amount of your monthly debt payments, including your mortgage, by your income. If the ratio is higher than 35 percent, you should work on reducing the amount of debt you currently have. The best way to do this is to set up a debt payment plan. Focus on one debt at time and pay extra money on that debt until it is paid off, then move to the next debt on your list. Many people choose to work on debts from the highest interest rates to the lowest.

Incorrect Items on Credit Report

An incorrect item listed on your credit report can cause your credit score to go down. Your report may show an account you did not open, a defaulted account you have paid off or a late payment when you paid on time. To find if you have any incorrect items, check your credit report each year. AnnualCreditReport.com allows you to check your credit reports once a year for free. To correct an item, you must contact the financial institution that reported it and ask it to correct the item. Then you need to contact the credit bureau and ask it to double-check the information. This process can take several months.

Late Payments

A series of late payments or loans in default, meaning you stopped paying the loans, can negatively affect your credit. The best way to fix this problem is to begin making your payments on time consistently. The most recent credit history weighs more heavily than old mistakes. If you can show you are now responsible with your money, the bank may be more willing to loan to you. You should also take care of any loans you have in default. Save up the money and make the payment all at once or contact the bank to settle the loan --- you must have a lump sum to offer them as payment in full. Paying off the debts in full looks better on your credit report, but settled debts are better than defaulted loans.

Don't Qualify for a Loan

You may not qualify for a loan because your debt to income ratio is too high, you have a poor credit history with late payments and loans in default, or you have just declared bankruptcy. One option is to save money and pay cash for things for a few years instead of borrowing money. Another option is to find a co-signer for the loan.

Read More

Am I Liable for My Husband's Debt?

Your liability for your husband's debt depends on where you live, the account terms and the type of debt involved. You should not assume responsibility for outstanding debts unless there is proof of liability and your state laws support the information. As with any situation with the potential for legal consequences, consult with a legal professional or contact your state Attorney General's office regarding your rights and responsibilities.

Facts

Unless you live in a community property state, you generally are not liable for your husband's debt unless you are a joint account holder, cosigner or otherwise have a contract with the creditor. Community property means that most debts and assets acquired during the marriage are jointly owned. Even if you reside in a community property state, you may not be responsible for debts your husband made prior to marriage.

Debt Types

Generally, if you file a joint tax return with your husband, you are equally liable for any tax debts. However, if your tax debt is deemed unfair or solely the fault of your husband, the IRS may approve an Innocent Spouse Relief claim absolving you of some or all of the tax debt. Unless held jointly or subject to community property laws, most consumer debts, such as credit cards or loans, remain your husband's obligation. There are exceptions and, depending on state law, you may be jointly liable for debt incurred for "life necessities" and household items used by the family or medical debts.

Concerns

Some states allow creditors to garnish joint bank accounts for delinquent debt with a court order. Some types of income, such as public aid, disability benefits and other government payments, are exempt from wage or bank garnishment. You must reply to the court summons, because failure to respond may result in automatic garnishment. If you are not liable for the debt, or the account contains protected funds, claim these exemptions with the court and notify the creditor and your bank of the exemptions.

Considerations

While federal law protects consumers from deceptive collection practices, when it comes to delinquent debt, your lack of liability isn't always enough to deter creditors. If debt collectors call, ask for proof of your liability. Request a copy of the original contract or other binding document. Being an authorized user on your husband's credit card does not necessarily mean you are liable for the charges, because you did not enter into a contract with the lender. If you feel harassed by a debt collector, file a complaint with the Federal Trade Commission of your state Attorney General.

Read More

Can You Consolidate Direct Student Loans?

If you have at least one direct student loan from the federal government, you can consolidate your loans into a single loan with just one monthly payment through a federal direct consolidation loan. This consolidation can help you lower your monthly payment and lock in a fixed interest rate for the duration of the loan.

Qualifying Loans

Direct student loans are issued from the federal government to students who apply and qualify. The main types of direct student loans are Stafford loans and PLUS loans. However, students also can consolidate other types of federal student loans, including Perkins loans and Stafford and PLUS loans disbursed through the Federal Family Education Loan program. You cannot consolidate student loans from private lenders with your federal student loans through the direct consolidation loan program. Unless you apply between July 1, 2010 and July 1, 2011, you cannot include loans with an in-school status with your direct consolidation loan.

Benefits

One of the major benefits of consolidating your student loans is that you rearrange them into just one loan with one monthly payment. You also can choose a repayment period of up to 30 years, which stretches out your payments over a longer time and makes each payment a smaller amount. However, a longer repayment period will cause you to pay more total interest. In general, a direct consolidation loan does not lower your interest rate because it is a weighted average of your existing rates, but if you have a loan with a variable interest rate, consolidating allows you to lock in that rate.

How to Consolidate

Apply for a consolidation loan by filling out the application on the federal direct consolidation loan website or printing the application, filling it out and mailing it in. If all of your loans that you want to consolidate are direct loans, you can apply over the phone by calling 800-557-7392. Continue making payments on all of your loans as scheduled until you have received confirmation of your consolidation loan.

Multiple Consolidations

You can consolidate your loans more than once, as long as you add at least one new loan to the consolidation loan each time. For example, if you already have a direct consolidation loan and you go back to school and get a direct Stafford loan, you can consolidate these loans together after you finish your schooling.

Read More

How to Pay Credit Cards After They've Been Turned Over for Collection

When your credit card account has been turned over for collection you have several options for paying. Credit card companies have in-house collection departments that handle your past due account. These debt collectors are located right on the premises. They will send out letters and make phone calls in an effort to collect your past due debt. Most credit card companies forward their severely past due accounts to collection agencies when the in-house department is unable to collect the account. If your account is still in-house you pay as usual but when a collection agency is handling the account you must pay the agency.

Instructions

1

Determine your account's stage of collections. Call the credit card company and let them know you want to make a payment. If they are still handling your account they will take a payment from you. If your account has been turned over to a collection agency the representative will ask that you call the collection agency to make arrangements. An account is forwarded to a collection agency, from the in-house collection department, when there has not been a payment in 90 days, according to the website Business Know How.

2

Call the collection agency. The credit card representative will be able to give you the collection agency's phone number. When you reach the agency, confirm that it has all of your correct information, including balance owed.

3

Make payment arrangements. It does not matter if the in-house collection department or a collection agency is handling your account, you will still need to make payment arrangements. The in-house collection department will be easier to deal with than the collection agency. Make payment arrangements that don't put a strain on your finances. If you are experiencing a hardship such as loss of job, death in the family, serious illness, birth, or a reduction of income, let the credit card representative know. Many credit card companies have hardship programs that can assist you, by reducing your interest rate, lowering your payments, and waiving some of the fees that are assessed to the account.

4

Choose a method for paying. You can pay by phone. The collection representative, in-house or the collection agency, will take your bank account information, which includes the nine-digit routing number located at the bottom of your check on the left side. You will also need to give him your checking account number. Payment by debit card is acceptable as well. Provide the representative with your 16-digit debit card number along with the expiration date.

5

Make sure you receive a confirmation number to verify your payment was made. The payments will be taken from your checking account. Payments can also be mailed. Obtain the correct address from the representative. If a collection agency has your account, do not send payments to the address on your credit card statement.

Read More