A debt you cannot afford to repay can make your life miserable. Fortunately, there are legal solutions to an overwhelming debt problem. One remedy is the statute of limitations. This law discourages unreasonable delay by limiting the time a creditor has to bring a lawsuit against you. The creditor cannot simply harass you forever and must file a lawsuit within a number of years or be forever legally barred. A time-barred debt cannot be legally enforced by the creditor or a subsequent collector.
Whether an old debt is time-barred depends on a number of factors. First, different time limitations can apply to written contracts, oral contracts, or even to credit cards. Consult with your attorney to determine whether your debt is time-barred. Second, the time when the limitation clock starts, or tolls, can sometimes be difficult to ascertain. Generally, the clock starts on the day you last made a payment on the debt. For instance, if the statute of limitations is five years, the debt would be time-barred if the creditor does not file its lawsuit within five years after your last payment. If you make a payment within the tolling period, the clock resets for another five year period.
A debt collector is allowed to contact you concerning a time-barred debt. The collector does not have to volunteer that the debt is time-barred, but is required by law to answer truthfully if you ask if the debt is beyond the statute of limitations. You can also dispute a debt that you believe is time-barred by sending the collector a letter within 30 days of receiving a written notice of the debt. Tell the collector that you dispute the debt, that you believe that it is time-barred, and ask for verification of the debt. A collector must stop trying to collect until you receive verification.
The statute of limitations is a defense to be used by a defendant in a lawsuit. On the other hand, discharging the debt in bankruptcy will stop a lawsuit on the debt from ever being filed. A bankruptcy discharge is a permanent legal injunction directed at the creditor and all subsequent collectors prohibiting any attempt at collecting the debt. That includes telephone contacts, letters, lawsuits, or garnishments.
If you have an old debt that has recently reappeared, speak with an experienced bankruptcy attorney and discuss your legal rights. The debt may be time-barred, or another legal defense may exist. You may also consider bankruptcy to stop any further harassment or collection.