When you see “The law limits how long you can be sued on a debt” on a collection letter, a deep sigh of relief is warranted! This is because the legal risks on the account are likely much less when that statute has passed. While this is wonderful news, it also helps to know that there are continued implications to having the debt remain outstanding. When an account is delinquent, it will be reported to the credit bureaus as being behind. The statute of limitations does not have any tie to how long an account appears on your credit report. Accounts generally remain on credit reports for seven years from the initial delinquency. So, even if you live in a state with a short statute-say three years-it will likely continue to appear in your credit report until the end of that seven-year time frame. In addition to appearing on your credit report, you may still experience collection activity on the account. Even if the collector cannot sue, they can call and send letters as long as they wish, up until you tell each new collector to stop in writing.
An entire subset of the debt purchasing industry focuses on purchasing debt long past the statute of limitations. If they continue calling and sending letters, your risks are not likely to change as long as you do not do something that resets the statute of limitations. Some ways you can unintentionally do this are by making a payment or even just a promise to make a payment on the debt in some states. Speaking with a debt attorney will help you understand how to handle ongoing collection activity on post-statute accounts. In fact, several laws govern the collection of this kind of debt. Suppose they are not adhering to these regulations. In that case, you may be able to take action against them, possibly leading to your receiving money from the collector. If you are in the market for a home or a mortgage refinance, the debt may pose a hurdle to you. Sometimes they will require the borrower to resolve the debt even if it is past the statute of limitations. You may have the option of settling the debt, or they may require that you pay the balance in full to complete the financing. Now that you understand what it means to see “The law limits how long you can be sued on a debt” on a collection letter, what’s next?
Sometimes inaction is the best strategy. Suppose you confirm that the account is truly past the statute of limitations, congratulations! Aside from a pesky remark on your credit report and occasional letters or calls, you are not likely to have much more trouble with this account. Even if the account isn’t actually past the statute of limitations, save the letter. If the same collector later files suit you can produce that in court to show why the case should be dismissed, because you relied on their assertion. Given that this is a state law with quite a bit of nuance, we suggest speaking with a debt attorney familiar with your state laws to ensure correct interpretation of the letter. The legal professionals at National Legal Center are glad to discuss your available options to help you move forward with confidence.
This crucial factor allows the consumer to make informed decisions on how to deal with the debt. The paragraph may include other vital points for you to be aware of. For example, they may also explain situations where they can regain the option to take legal action, such as when the debtor agrees to make a payment. So, be sure to read the letter closely. Sometimes it helps you understand what not to do! What is a Statute of Limitations? A statute of limitations is how long a person or entity has to take legal action against another person or entity for a grievance.
These are just a few examples of facts to consider when determining what it means when you see “The law limits how long you can be sued on a debt” on a collection letter. There is a good chance that seeing that language on a collection letter means the collector should not file a lawsuit. However, it is imperative to speak with a licensed debt attorney to be sure. They will be able to help you interpret the document correctly and guide you on the next steps. What Starts The Clock? In many jurisdictions, the account starts counting down toward the statute of limitation when the last transaction occurred. That, of course, does leave plenty of gray area, which is why it is best to err on the side of caution. Reviewing your credit report can help you identify the date the creditor reported to the credit bureaus as the last payment date, as well as when the account charged off.
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