Bad Credit Time Limits - Debt Collection
Debt Collection
- Collections - credit company can use its own
collection department or an outside collection agency to demand payment on
debt. It is done by letters and phone calls and can last for ever as long as
debt is not paid off. According to the Fair Debt Collection Practices Act, a
debtor can enforce an outside collection agency to stop such a communication
which is often borders with harassment. Usually credit companies and
collection agencies give up somewhat fast on old and insignificant debt. And
if the debt is not secured by some collateral, like car, antiques, jewelry,
creditors must file a lawsuit to force you repay.
- Lawsuits - when consumer is seriously late on a loan and amount
of debt is significant, creditor can file a lawsuit. The time limit for
suing is called the Statute of Limitations or SOL. SOL varies from state to
state. The relevant statute belongs to the state in which debtor lived at
the time of the delinquency. If the statute of limitations expired,
creditor still can sue, but debtor has an bulletproof defense. Debtor
needs to file a response with the court, pointing out the expiration fact,
and lawsuit will be dismissed. See table with the statute of limitations for each state and
type of debt.
- Judgments - if creditor filed and won lawsuit then there is a
separate statute of limitations for enforcing the judgment meaning actual
collection of debt. See table with the statute of limitations for judgments for each state.
- Federal Taxes - the SOL is ten years after the date of the assessment.
But if lien was filed, then collection efforts can go forever.
- Student Loans - defaulted federal student loans have no statute
of limitation whatsoever. This is the worst type of loans to default. It is
practically impossible to discharge even under bankruptcy and collection
efforts and or lawsuits can go forever.
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