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Tuesday, June 22, 2010

Debt Defense Mistake Number One - Don't Revive An Old Debt

There is a legal term called a "Statute of Limitations". This is a legal term for a time limit in which a lawsuit must be brought on a debt or it is barred forever. There are three crucial dates with every Statute of Limitation. First, when does the statute BEGIN TO RUN. In other words, when can you start your clock ticking on the time limit. A statute of limitation typically begins to run from the "date of default". Again this is a technical legal term, but it is essentially the date you broke your agreement or the date you missed your payment and went into default. The second important date is the date the statute of limitation expires. In other words, the date that time is up for your creditor to sue you for not paying the debt. This needs to be explained in a little more technical detail. A statute of limitation is not a bar to being sued. It is a defense if you are sued. A creditor may still call you, write you, demand payment, even sue you for a time barred debt. None of those actions is a per se violation of the Federal Fair Debt Collection Practices Act. A statute of limitations is a defense to being sued. If you are sued after the time limit has ran, you can plead the statute of limitations as a defense and the suit will be dismissed. Now we have a start and an end date, so I know you are asking what in the world is the important third date. The third date is Debt Defense Mistake Number One-the date you revive an old debt. Depending on what state you reside in, there are a multitude of ways you can revive a time barred debt. Generally if you admit you owe the debt, if you agree to repayment of the debt and most importantly, if you make a payment on the debt, the statute of limitation clock starts all over again. Many creditors who buy time barred debts for pennies know these tricks and will contact you and get you to make a minimal payment solely for the purpose of restarting the statute of limitations so you can be sued for the full amount of the debt plus interest. Don't make this mistake. Educate yourself! Figure out when you defaulted and do the math and see if your debt is time barred. The link below lists the general statutes of limitations for each state. A credit card debt is typically considered an open account debt.


Credit Repair said...


great post, it really helped me alot…gives me alot of information… thanks…. nice job…
Self Credit Repair | Bad Credit Repair Report

Anonymous said...

Many states make it a violation of the FDCPA to demand payment beyond the statute of limitations; or to ask for payment without advising a debtor that the statute of limitations has passed. The advising of the debtor that the statute of limitations has passed is related to fact that legally all debtors must be treated as the least sophisticated consumer. Any threat of a suit, or legal action, beyond the statute of limitations has also been deemed to be an FDCPA violation in some states as well.

craig barrett said...

Your information is not correct. It is a violation of the FDCPA to file a complaint on an out of statute debt. You may not think it is, because the FDCPA does not explicitly state so, but the issue has been put to rest. If you dont believe me, go ahead and try it. You will be sued under the FDCPA and you will lose.

Maryland Criminal Lawyer said...

I just came across your blog, really enjoy it. I know it can be difficult to explain the law to people who do not study it, but your blog is a wonderful attempt. Thanks!

Dept Settlement Attorney said...

Terrific post.. I enjoyed a lot while reading it. It helps me a lot to sort out the situation which I was facing. Thanks a lot..

Anonymous said...

What about car loans in TN? I have tried to get info from the collection agency in regards to a defaulted car loan - they wouldn't give me any info without a promise to pay or my contact info, so I hung up.

Then I called to try to GIVE THEM THE CAR because no one had repossessed it, and they said they had no record of the loan or collection file.

Now I don't know what to do. I live in another state now and I don't have a title on the car so it can't be registered or insured and it has been sitting unused for almost 5 years.