What is Statute of Limitation? The Statute of Limitation is the maximum time limit for a creditor to file a lawsuit in federal courts to claim the outstanding amount against a fraudulent debtor. If the lawsuit is not filed within the stated time limit, the creditor will loose the right to claim or sue for it forever. That means the debt collector will no longer have any right to sue you for payment of old debt. If a debt collector still threatens to sue you, he will be punished for violating the Fair Debt Collection Practices Act. Usually the SOL time limit lies between 3-10 years after the moment you signs up a credit contract or the last activity date written on your credit report.
The purpose of the Statute of Limitation is to ensure that a debtor will not worry about being sued by the creditor for the rest of his life and he gets a chance to defend himself with new evidence. This does not ensure that a creditor will not be able to sue you. If a creditor does that, you can ask the judge to dismiss the case on the ground of expired time period. The Statute of Limitation does not hold for certain type of debt such as Federal Student loans, most types of fines, past due child support (depending on states).
The statute of limitation on debt depends upon the following: • The amount of debt you owe. • Your State’s civil debt collection code.
Statute of Limitation in the United States The chart below depicts the Statute of Limitation in different states of the United States. If you want to know specific details on any account, you can contact your State’s Attorney General Office.
Oral Contract: You agree to pay money loaned to you by someone, but this contract or agreement is verbal (i.e., no written contract, "handshake agreement"). Remember a verbal contract is legal, if tougher to prove in court.
Written Contract: You agree to pay on a loan under the terms written in a document, which you and your debtor have signed.
Promissory Note: You agree to pay on a loan via a written contract, just like the written contract. The big difference between a promissory note and a regular written contract is that the scheduled payments and interest on the loan also is spelled out in the promissory note. A mortgage is an example of a promissory note. Open-ended Accounts: These are revolving lines of credit with varying balances. The best example is a credit card account.
Statute of Limitations on Judgments The question of judgement comes up when a creditor files a lawsuit to recover the outstanding amount from the debtor. They must sue the debtor before the SOL time limit expired. At this time, the court will contact you via mail. The creditor will need to proof that the debt is actually owed. Once judgement is passed, the creditor has every right to seize your assets, bank accounts or garnish wages.
The information is given above is believed to be correct at the time of creation of the page and is for reference purpose only. If you find any information incorrect, you can get it verified with your state Attorney General or contact us.
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