Showing posts with label limitations. Show all posts
Showing posts with label limitations. Show all posts
Saturday, March 29, 2014
Can You Reset the Statute of Limitations on a Debt
If there is one thing that trips people up the most about the statute of limitations on debt collection, its whether or not the time frame can be reset and, if so, when.
ReadThe RestEntry..
Essentially, yes, actions you take can reset the statute of limitations and open you up to a lawsuit once again. Keep in mind, however, if the collection agency files a lawsuit against you and you attempt to use the statute of limitations defense in court, the company will then have to prove that you did, in fact, reset the statute (more on that in a minute).
You Can Reset the Statute of Limitations on Debt By Making Payments
A debts statute of limitations is essentially the time-clock on a dormant debt. As long as that debt remains dormant, the clock continues to tick. Should you make a payment on the debt, this "reactivates" the account. Because the debt is no longer dormant but is now active, the statute of limitations ceases to matter. If and when you once again default on your payments, your states statute begins anew.
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| Dont reset the clock! |
Now, before I go any further, I will say that supposedly in some states a debtor can unintentionally reset the statute of limitations by promising to make a payment, even if he doesnt ever actually submit one. This is iffy at best. Even in a case where the states laws allowed such a thing, the collection agency would have to provide proof that the debtor made such a promise. Granted, collection agencies record telephone calls, but the idea that they would maintain those telephone records for long enough to use them as lawsuit fodder is also a relatively sketchy concept.
Earlier today, I stumbled upon a post that absolutely disgusted me. A self-proclaimed "credit guru" who seems to be plastered everywhere I look online these days was telling some poor girl that by merely talking to a debt collector about a ten year old debt, she had already reset the statute of limitations. This, of course, is complete and utter BS.
AAAAAAHHHHH!!!
Frustrating. In reality, it isnt that hard to look up the specific statutes for your states. Most states provide individuals access to the law codes online.
Resetting the Time Frame on an Old Debt
If you have a debt that is owned by a collection agency yet is time-barred, send the collection agency a Cease and Desist letter and forget about it. Pull your free credit report three times a year (one every four months. Its still free as long as you dont pull the same bureaus report twice in a year) to make sure the collection agency hasnt gotten sneaky and pursued a default judgment on the sly and then leave well enough alone. You cant reset the statute of limitations if you dont take initiative to do so.
Be warned, however, debt collectors will pull every trick in their arsenal to try and trick you into paying anything you possibly can so that youll once again be open for a lawsuit. Dont fall for it.
Wednesday, March 5, 2014
Credit Reporting Period vs Statute of Limitations
Credit Reporting Period vs. Statute of Limitations
If there is one thing that confuses people more than anything else about their collection accounts, its that they get the credit reporting period mixed up with the statute of limitations.
Ive written several posts on statutes of limitations, but to make things simple, heres the difference between the two:
1. Statute of Limitations – The statute of limitations ers to how long a given creditor has to sue you. Every state has a different statute of limitations. This length of time does not in any way, shape or form impact your credit report (unless you get a judgment, but thats a whole nother can of worms).
2. Credit reporting period – This is the amount of time that a given entry can remain on your credit report. The credit reporting period for most items is mandated by the Fair Credit Reporting Act and are a matter of federal law. Regardless of where you live, the credit reporting period for a collection account is seven years.
Paying Debt Collectors Doesnt Reset the Credit Reporting Period.
Every time you make a payment to a collection agency, youre resetting the statute of limitations and giving them extra time to sue you in the event you stop making payments. What fun. You could submit a payment to a collection agency every day, however, and it wouldnt change the amount of time the collection agency had to bring legal action against you. As a matter of fact, some people end up paying zombie debts and are paying on collection accounts long after they legally need to – especially when the collection agency couldnt even hurt their credit!
Collection Agencies Cant Reinsert Obsolete Accounts
No matter what a debt collector says to you on the telephone about reporting your debt to the credit bureaus, if that debt is older than 7 years and 180 days, its illegal to so much as touch your credit files.
The credit reporting period for a bad debt starts 180 days after you make the last payment on the account. This is the same date used to determine the statute of limitations on bad debts. The major different between the two is that, while you have the power to turn back the clock on the statute of limitations, nobody can do a damn thing about the credit reporting period. Its set in stone.
Thats not to say that debt collectors dont try. They do. Collection agencies are notorious for changing the age of debts just so theyll hang around on a debtors credit report a little bit longer and maybe net an extra payment for the company. Of course, by the time a collection account is obsolete and a collection agency feels the need to reage it, the statute of limitations has usually passed. Thus, the incentive for reaging is usually filing a lawsuit (or threatening to file one, since technically a collection agency cant legally make threats its unable to carry out). At that point, your debt likely sits with a junk debt buyer rather than a real collection agency and the junk debt buyer would love nothing more than a default judgment.
So thats the skinny, more or less. Dont let the debt collectors fool you. once the credit reporting period expires on your debt, its game over for the collection account within your file.
ReadThe RestEntry..
If there is one thing that confuses people more than anything else about their collection accounts, its that they get the credit reporting period mixed up with the statute of limitations.
Ive written several posts on statutes of limitations, but to make things simple, heres the difference between the two:
1. Statute of Limitations – The statute of limitations ers to how long a given creditor has to sue you. Every state has a different statute of limitations. This length of time does not in any way, shape or form impact your credit report (unless you get a judgment, but thats a whole nother can of worms).
2. Credit reporting period – This is the amount of time that a given entry can remain on your credit report. The credit reporting period for most items is mandated by the Fair Credit Reporting Act and are a matter of federal law. Regardless of where you live, the credit reporting period for a collection account is seven years.
Paying Debt Collectors Doesnt Reset the Credit Reporting Period.
Every time you make a payment to a collection agency, youre resetting the statute of limitations and giving them extra time to sue you in the event you stop making payments. What fun. You could submit a payment to a collection agency every day, however, and it wouldnt change the amount of time the collection agency had to bring legal action against you. As a matter of fact, some people end up paying zombie debts and are paying on collection accounts long after they legally need to – especially when the collection agency couldnt even hurt their credit!
Collection Agencies Cant Reinsert Obsolete Accounts
No matter what a debt collector says to you on the telephone about reporting your debt to the credit bureaus, if that debt is older than 7 years and 180 days, its illegal to so much as touch your credit files.
The credit reporting period for a bad debt starts 180 days after you make the last payment on the account. This is the same date used to determine the statute of limitations on bad debts. The major different between the two is that, while you have the power to turn back the clock on the statute of limitations, nobody can do a damn thing about the credit reporting period. Its set in stone.
 |
| This may as well be quoting the credit reporting period... ...because you cant change it. |
Thats not to say that debt collectors dont try. They do. Collection agencies are notorious for changing the age of debts just so theyll hang around on a debtors credit report a little bit longer and maybe net an extra payment for the company. Of course, by the time a collection account is obsolete and a collection agency feels the need to reage it, the statute of limitations has usually passed. Thus, the incentive for reaging is usually filing a lawsuit (or threatening to file one, since technically a collection agency cant legally make threats its unable to carry out). At that point, your debt likely sits with a junk debt buyer rather than a real collection agency and the junk debt buyer would love nothing more than a default judgment.
So thats the skinny, more or less. Dont let the debt collectors fool you. once the credit reporting period expires on your debt, its game over for the collection account within your file.
Thursday, September 5, 2013
Debt Collection Lawsuits The Statute of Limitations Defense
Stop a Debt Collection Lawsuit
If you know what youre doing, you can successfully halt a debt collection lawsuit in its tracks using the following methods:
The Statute of Limitations Defense
Each state has a statute of limitations for debt collection lawsuits. The time frame varies and can range from around 4 years in most states to 15 years if you happen to be unlucky enough to be living in Rhode Island. Once the statute of limitations expires, your debt is time-barred.
That doesnt mean that debt collectors wont try to sue you. Not responding to a lawsuit nets you a default judgment which is enforceable regardless of whether or not the debt was time-barred at the time the default judgment was levied. In order to fix it, youd have to return to court and contest the judgment. Its time-consuming and, if you hire an attorney, expensive.
If you receive a summons for a debt collection lawsuit and you know for a fact that the debt the company is trying to sue you for is outside your states SOL, fire back with a letter informing the collection agency that the debt is time-barred in your state and you would be more than happy to appear in court and inform the judge of that fact. Knowing that it cannot win, the collection agency will usually drop the lawsuit.
Like Ive recommended before, its a wise idea, in situations such as these to shell out a few bucks to have an attorney draft your letter. Collection agencies are always more likely to back off and drop a debt collection lawsuit when they know you have access to an attorney.
ReadThe RestEntry..
If you know what youre doing, you can successfully halt a debt collection lawsuit in its tracks using the following methods:
The Statute of Limitations Defense
Each state has a statute of limitations for debt collection lawsuits. The time frame varies and can range from around 4 years in most states to 15 years if you happen to be unlucky enough to be living in Rhode Island. Once the statute of limitations expires, your debt is time-barred.
That doesnt mean that debt collectors wont try to sue you. Not responding to a lawsuit nets you a default judgment which is enforceable regardless of whether or not the debt was time-barred at the time the default judgment was levied. In order to fix it, youd have to return to court and contest the judgment. Its time-consuming and, if you hire an attorney, expensive.
If you receive a summons for a debt collection lawsuit and you know for a fact that the debt the company is trying to sue you for is outside your states SOL, fire back with a letter informing the collection agency that the debt is time-barred in your state and you would be more than happy to appear in court and inform the judge of that fact. Knowing that it cannot win, the collection agency will usually drop the lawsuit.
Like Ive recommended before, its a wise idea, in situations such as these to shell out a few bucks to have an attorney draft your letter. Collection agencies are always more likely to back off and drop a debt collection lawsuit when they know you have access to an attorney.
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