The statute of limitations on debt is a law limiting how long a creditor can sue you for payments on a debt.
One of the main issues that people all over the world consider carefully when dealing with a large amount of personal debt, is the issue of “how long a debt can be chased up by creditors?” and “how long am I liable for the debt for?” and other important related questions.
In this article, we will explore these questions and provide valuable insight into how the ‘statute of limitations on debt’ has rules that could exempt you from having to repay your debt given the right circumstances.
Debt collection statute of limitations
Okay, I have personal unsecured debts, how does this affect those? Before cutting up your credit cards, you have some options.
Per MoneyGator.net, “If you have loans, mortgages, or credit card debt (or another form of unsecured debt) you may have a ‘statute barred’ debt which would mean you aren’t obligated to repay the debt because it is no longer enforceable legally.”
But for this to be the case the debt must fit the following criteria, abiding by the following:
- You must have had no contact between yourself and your creditor for more than 6 years to fulfill the ‘six-year time limit’ (this includes answering emails, text messages, and all verbal correspondence).
- Your debts must be ‘unsecured personal debts’ there are certain types of debt this does not apply to (more on this below).
- You must not have made a payment to the debt in question, as this would be an acknowledgement of the liability and would mean you accept the liability and therefore any ‘time-barring’ would not apply.
These sources can help you find the statute of limitations on debts you face. The best option for you depends on your time and budget:
- State attorney general’s office: Can provide free legal information but may be hard to reach out too.
- Local legal aid: Inexpensive option, but their attorneys and paralegals are often overbooked and overworked.
- A consumer attorney: Can offer personalized and faster help but at a higher cost to you.
Which types of debt does this rule on ‘time-barring’ not apply to?
- Mortgages are subject to different laws’ and the time-barring period for mortgages is approximately 12 years (mortgage shortfalls).
- Council tax liabilities do not have a six year time limitation.
- Secured debts generally do not become ‘time-barred’ and thus would not be subject to this type of scenario falling within the law.
- Guarantor loans are also not subject to this item of law.
Generally, most unsecured debts fall into this time limitation period, for further information on how long a creditor can chase up debt repayments.
What should I do If I have a debt that I suspect is ‘time-barred’?
Firstly seek advice from a financial expert to verify this for you, ‘stepchange’ and ‘Debtsolve.uk’ both have excellent advisers’ that can help with such queries, it would be best to get a professional opinion on this matter in order to ensure you make the best decision.
Next, check any and all paperwork you have at home or in the office for any traces of correspondence in relation to the debt, if you have documents filed at home or scanned versions on the computer, even better, don’t worry if you don’t have the paperwork on file, Experian has a credit check facility as does ‘clear score and many others which can enable you to check your credit history.
How about if the creditor contacts’ me and I have statute-barred debts?
If you have debts that are definitely statute barred then you have every right to contact your creditor informing them that due to the fact that your debt is in fact ‘statute barred’ and therefore no longer an active liability.
As the liability can no longer be pursued, there will be no reason to worry about it, as it cannot be pursued through the courts or enforcement action.
How about if my debt is not ‘statute-barred’ (time-barred)
This would mean the debt would need to be repaid through other means, you may wish to explore the possibility of an IVA or a DMP (debt management plan) in order to tackle not only the debts but to help with some of the issues relating to those debts such as ‘accrued interest’ or ‘none payment charges’.
In any case, it is important to note, there is help out there for you no matter what your personal circumstances, the best way forward is to deal with your debts and not let them spiral out of control.
Getting the right information
You must learn more about this debt and the debt collectors have a legal obligation to give you information on it
If you recognize the debt as yours
If you do recognize that the debt is yours then you should collect all the paperwork you have on it, such as amounts, payments, etc. Then when you reach out to the collectors, you can ask them:
- Is the debt time-barred?
- When was the last debt payment?
If the debt collectors answer the 1st question, they’re required by the Fair Debt Collection Practices Act to answer it truthfully. However, they’re not required to answer it at all.
If they don’t answer then you can inquire about the last date of payment, and they can also learn about this information through the debt validation letter. Which they must send you within 5 days of initial contact. This will tell you the amount owed, last payment, the collector and how to get information about the original creditor.
If you don’t recognize the debt
The debt collection industry is known for trying to collect debts from wrong people. If you don’t recognize the debt then you can refer to your own records and ask for a validation letter to clarify any mistakes. This will help you figure out if you should challenge the debt.
Next, you can check out this interesting article about why people can’t save money and how to avoid it?