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| Credit Answers > Debt-Management-Articles-2009 > Statute of Limitations |
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What is the statute of limitations in regards to consumer debt?
The statute of limitations (SOL) is the legal time frame in which debt collectors can file suit on an unpaid debt. SOL varies depending on the type of loan and the state in which
you live. The Credit Infocenter web site gives a description of various account categories and a detailed list of the SOL for each state.
Do I still owe the debt if the statute of limitations has expired? Some consumers incorrectly believe that the debt disappears because the statute of limitations has
expired.
Generally, collectors may still attempt to collect the debt, but they can not file a lawsuit against you to demand that you pay the debt.
Also, some consumers confuse the statute of limitations with the amount of time a debt appears on their credit report. According to the Fair Credit Reporting Act (FCRA), the debt
can still be reported for seven years from the date of the last missed payment, even if the statute of limitations may have previously expired.
Could the statute of limitations ever restart on a debt?
In most cases, if you resume paying on an old debt or agree to a payment arrangement, that can revive the statute of limitations. Be cautious when speaking to debt collectors
regarding old debts. You should consult an attorney regarding the specific laws in your state.
What do I do if a collector attempts to sue on an old debt?
We urge you to seek legal advice if you believe a collection agency is trying to collect on a debt for which the statute of limitations has already passed. Old, delinquent
debts are also referred to as "zombie" or "time-barred" debt. This industry has become a profitable business for debt collection companies in recent years. MSN Money reports
that debt buyers purchased $110 billion of old debts in 2006. However, zombie debt has also been the subject of concern among several Federal Trade Commission (FTC) complaints.
Infringements included inflating the amount of outstanding debts, contacting consumers at work, and threatening to take actions that they did not intend to take such as
reporting the debt to the credit bureau and legal proceedings. For more information about complaints against debt collectors, visit the FTC's web site and click on the "News"
link.
Are there any debts that do not have a statute of limitations?
According to www.FairDebtCollection.com, a statute of limitations does not usually apply to federal student loans, certain types of fines, delinquent child support, and taxes.
DISCLAIMER: THIS IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT INTENDED TO BE LEGAL ADVICE. ANY INQUIRIES ABOUT SPECIFIC SITUATIONS SHOULD BE DIRECTED TO A LAWYER.
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