When you owe a massive amount of debt, you may wonder what would happen if you ignored all collection attempts indefinitely. Would it ever go away? Would you lose all your assets in the process? How long would it take for collectors to stop calling?
According to the Federal Trade Commission, debt becomes “time-barred” after a certain number of years. The exact time frame depends on the type of debt and state law. If your collector wants to sue you for the debt you owe, they must file suit within the corresponding statute of limitations.
Here are 5 key facts about time-barred debts:
- The statute of limitations generally begins when you miss a payment.
- The statute of limitations is often different from the credit reporting period, which is usually 7 years.
- It is fully legal to not pay time-barred debt. However, this may lower your credit rating and adversely affect your ability to get loans, insurance, and more. The collector cannot sue you for this debt, but they can continue to make lawful collection attempts.
- If you make a partial payment on a time-barred debt, the statute of limitations may reset, depending on your state. The collector could then sue you for the full amount.
- If you manage to negotiate a lower amount than what you owe, you will need to document this arrangement. If you don’t have proof that the creditor settled for a lower amount, they could treat it as a partial payment and take you to court.
What to Do if a Collector Contacts You About a Time-Barred Debt
Contacting you about time-barred debt is perfectly legal, but creditor harassment is not. You can report unlawful collection attempts to the Attorney General’s office, the Federal Trade Commission, or the Consumer Financial Protection Bureau. You may also be able to take the collector to court.
If the collector is contacting you lawfully, you have the following options:
- Ask the collector if the debt is beyond the statute of limitations
- Ask when your last payment was
- Send a letter stating that you are disputing the debt and requesting verification
While the collector cannot lie, they can decline to answer your questions. If they decline to answer, send the verification request within 30 days of receiving their notice. Under federal law, collectors must stop contacting you until they provide verification.
If the collector sues you for a time-barred debt, the judge will dismiss the lawsuit only if you respond in time and provide adequate evidence. If you fail to respond, the collector may be able to take money from you without your permission via wage garnishment or a bank levy. As with creditor harassment, you can report a collector for violating the statute of limitations.
Is a Collector Contacting or Suing You for a Time-Barred Debt?
Without support from a seasoned legal team, defending yourself against debt collectors will be a serious undertaking—even if the law is on your side. Our lawyers at The Buchalter Law Group are fully prepared to provide information about your debt’s statute of limitations. Furthermore, we can assess your situation and help you determine the best course of action. We have a thorough understanding of the common pitfalls debtors face in these situations, and we want to protect you from long-lasting legal and financial consequences.