Statue Of Limitations on Your Debts

Tue, 03 Mar 2009 01:33:29 +0000

While you might know that your credit report has a limit of 7 to 10 years before items are removed, the debt themselves actually might be different. The statue of limitations is the amount of time a credit has to sue you for an unpaid debt. It is usually starts at the time you went delinquent and the limit of time varies from state to state.

The limit can also vary on the type of debt instrument. Here is a brief description of each:

Written Contracts – These are written agreements between lender and borrower.
Oral Contracts – These are contracts that lack a written statement of payment. They could be agreements made on a handshake.
Promissory Note – This is a written contract for payment. They must outline the amount of the loan, interest rate, and payment terms. Today, a common use of promissory notes is in peer to peer loans. Mortgages are the most commonly known form of promissory notes.
Open - The recognized form of this type of account is a credit card. There are no term to the agree and the debt is revolving.

State	Written Contracts	Promissory Notes	Oral	Open
Alabama	6	6	6	3
Alaska	6	6	6	3
Arizona	6	5	3	3
Arkansas	5	6	3	3
California	4	4	2	4
Colorado	6	6	6	6
Connecticut	6	6	3	6
Delaware	3	6	3	3
D.C.	3	3	3	3
Florida	5	5	4	4
Georgia	6	6	4	4
Hawaii	6	6	6	6
Idaho	5	10	4	4
Illinois	10	6	5	5
Indiana	10	10	6	6
Iowa	10	5	5	5
Kansas	5	5	5	3
Kentucky	15	15	5	5
Louisana	10	10	10	3
Maine	6	6	6	6
Maryland	3	6	3	3
Massachusetts	6	6	6	6
Michigan	6	6	6	6
Minnesota	6	6	6	6
Mississippi	3	3	3	3
Missouri	10	10	5	5
Montana	8	8	5	5
Nebraska	5	6	4	4
Nevada	6	3	4	4
New Hampshire	3	6	3	3
New Jersey	6	6	6	6
New Mexico	6	6	4	4
New York	6	6	6	6
North Carolina	3	5	3	3
North Dakota	5	6	6	6
Ohio	15	15	6	6
Oklahoma	5	5	3	3
Oregon	6	6	6	6
Pennsylvannia	6	4	4	6
Rhode Island	15	10	15	10
South Carolina	10	3	10	3
South Dakota	6	6	6	6
Tenessee	6	6	6	6
Texas	4	4	4	4
Utah	6	6	4	4
Vermont	6	5	6	6
Virginia	5	6	3	3
Washington	6	6	3	3
West Virginia	10	6	5	5
Wisconsin	6	10	6	6
Wyoming	10	10	8	8

When Does the Clock Start

That is not something that is entirely clear. The idea is you have made an agreement with a creditor for a loan and if you violate the agreement the statue of limitations starts. The violation would be you not paying your bill. This makes the agreement that you have entered into the true determinate of when the statue of limitations begins.

Also is the consideration of what happens if you pay a portion of the outstanding bill. I wrote a post in regards to paying old bills and it warned of the dangers of paying old debts. This could restart or extend the stature of limitations. This actually depends on the state.

Conclusion

The best practices of dealing with old debts is sometimes to consult a lawyer on how to procede. The last thing you want to face is being sued for an old debt.

Related posts brought to you by Yet Another Related Posts Plugin.

Should You Pay Old Debts

Sat, 21 Feb 2009 23:26:39 +0000

The best way to put it is you owe the old debts until they are paid or wiped out by bankruptcy. Having these debts is going to make it extremely difficult to get a mortgage.

Consumers sometimes believe that if the debt is unpaid and it is older than seven years it will be off your credit report. The truth is these debt will go to collections and will not be removed. So the late payments will not show, but the collections will stay.

Considerations When Paying Old Debts

It could or couldn’t hurt your credit score. This is because of the different scoring models used. Paying these old debt will make the certain formulas think this debt is new. Other formulas specifically the newer FICO formulas realized that you are paying old debts and it will not effect your credit score.

The Statue of Limitations

Every state has a different length of time to which a creditor can sue you over a debt. If you do pay these old debts this can extend the exposure. It is also an admission that you do owe this money and the account could take you to court over it.

Who You Pay

Often the company that you now owe the money to will not be the original creditor. This is because debts are often sold for collection agencies and this means you will have to deal with them.

What You Owe

Since individuals are more than likely dealing with a collection agency, they sometimes do not feel the same way about paying them compared to the original account. For individuals who look to pay off these debts, they often can negotiate with the creditors to what they will pay. Though some people state it is a moral obligation to pay what you owe.

Other Considerations

Collection Agencies

The companies in this field can be difficult to deal with. That actually might be an understatement. Consumers frequently have complaints about dealing with them. Some best practices is:

You should try to deal with the original creditor if possible
If you are dealing with a collection agency you need to plan your attack. You should try to exchange a lump sum payment for the account being deleted.
Get everything in writing. This is a must if you are going to protect yourself.

Try to have the account reported as “paid as agreed”

Paying the old account could have the account state it was settled on your credit report. This will carry a large negative effect on your credit score. You should try to negotiate it to read “paid as agreed.” Even better would be to work the agreement with the account to have it stop being reported.

Conclusion

Be careful if you are deciding to pay old debts. The last thing you want is to land in court. Sometime consulting a lawyer is a good idea.