Having significant debt is scary. Even if you can make regular payments, steep interest rates often make it impossible to pay off the debt quickly. The inability to make payments on time or make them at all may have a lasting impact on your credit score. This in turn may limit your ability to rent an apartment, buy a car, or get a mortgage. It may even hamper your ability to get a job.
Persistent phone calls and notices from debt collectors may also make your life difficult. In some cases, the debt collectors may threaten to sue you. The good news, however, is that they have a limited time in which to do so. Keep reading to learn more about time-barred debt or the statute of limitations on debt.
What is time-barred debt?
Time-barred debt is an old debt for which a debt collector can no longer sue the debtor to collect.
Debt collectors only have a certain amount of time under applicable laws to take legal action against debtors. If they fail to do so within that time, called the statute of limitations, the debt is classified as time-barred. Debt collectors are legally prohibited from suing for the non-payment of time-barred debt.
Generally the statute of limitations begins when someone fails to make a payment on outstanding debt. The type of debt incurred and pertinent state law determines when it ends.
The statute of limitations on debt collection in Nevada
Under Nevada law, for example, the statute of limitations on debt collection begins when the last financial exchange occurs, the last item is charged or the last credit is provided. In general, it is:
- Six years for medical debt
- Four years for credit card debt
- Four years for motor vehicle loan debt
- Ten years for state tax debt
There is an important caveat, however. Payment on an outstanding debt at any time after the original statute of limitations takes effect triggers a new one.
The statute of limitations on debt collection in Washington
The statute of limitations on debt collection in Washington also depends on the type of debt.
If the debt defaulted on is based on a written contract, the debt collector or collection agency usually has six years in which to file a lawsuit against the debtor. If the debt defaulted on is based on an oral contract, the debt collector or collection agency usually has three years in which to file a lawsuit against the debtor.
If the debtor makes a payment on the outstanding debt after the original statute of limitations is in effect, it resets. Conversely, if the debtor does not make a payment until the statute of limitations has expired, the payment will not trigger a new one.
What to ask a debt collector who contacts you about a time-barred debt
Even though debt collectors cannot sue anyone to recoup time-barred debts, they can contact debtors about it. Here are a few things to keep in mind.
- A debt collector must answer all of your questions truthfully.
- You have the right to ask about the statute of limitations if you believe the debt may be time-barred.
- You also have the right to ask what their records show as the date of your last payment. This will help pinpoint when the statute of limitations began.
- If the debt collector refuses to answer, you have the right to send a letter within 30 days after receipt of a written notice of the debt. This letter should state that you are “disputing” the debt and that you want to “verify” it.
- Collectors cannot keep trying to collect the debt while the verification is pending. Keep a copy of your letter as proof that you requested verification, and the verification provided.
Steps to take if you are sued for a time-barred debt
Based on the foregoing information, you may be tempted to simply ignore a lawsuit initiated by a debt collector to collect time-barred debt. That is the worst course of action. By ignoring a lawsuit, you risk the collector securing a court judgment against you.
Instead, contact Debt Rescue Law at 833-707-1234. We can easily assess your situation and provide the legal advocacy you need to get the case dismissed. We can also determine whether the debt collector violated your rights under the Fair Debt Collection Practices Act (FDCPA). If so, we will fight to get you the compensation you deserve.