Debt Collection Statute of Limitations

When you should ignore debt collectors.

Debt collectors are devious.  And one of the things they do is to threaten to take you to court to collect debts that are outside the statute of limitations. This is also called “time-barred debt.” Nearly all states have some sort of statute of limitations on old debt, especially credit card debt.  What this means varies from state to state, but some of them are tightening up on the rules for old debt.

For example, the Wall Street Journal reports that, “Bill collectors in New Mexico will be soon required to inform borrowers they can’t be taken to court for long-overdue debts…..

“Since April 2010, New York City has required debt collectors to notify consumers in writing if the debt has passed the statute of limitations, known as “time barred.”

“Wisconsin and Mississippi have laws that not only eliminate the right to sue on time-barred debts but extinguish the debt entirely.”

If a debt collector comes after you for an old (four years or more), unsecured debt, like a credit card debt — one that is large enough to justify going to court (at least $1,000) — make sure you find out how old it is and what your state statute of limitations is.  The chances are reasonably good you can safely ignore them.

One caveat:  Do not make any payments unless you intend to settle the whole debt.  That could start the clock ticking again!

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