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What to do if Debt is Past the Statute of Limitations
by
JG Wentworth
•
July 15, 2024
•
8 min
For many Americans struggling under the weight of overdue bills, debt can feel like an inescapable burden that never goes away. But unbeknownst to some, there’s actually an expiration date on how long creditors and debt collectors can pursue you for certain unpaid debts. It’s called the statute of limitations, and understanding how it works could save you a world of financial hurt down the road.
This information is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that You consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions.
Statute of limitations, defined
The statute of limitations is the limited time period that debt collectors have to file a lawsuit against you to compel repayment of money you owe them. Once that window slams shut, your debt is considered “time-barred” – meaning a collector can’t take you to court over it anymore. This statute varies from state to state (typically between 3-6 years for most consumer debts like credit cards) and by type of debt.
Past the point of no return?
So, what does this mean if zombie debt from your past comes stumbling back into the picture after the statute has already run out? First off, don’t panic – having time-barred debt isn’t illegal. The creditor can still try to collect, but they’ve lost perhaps their biggest stick of taking you to court and getting a judgment that could allow them to garnish wages or seize assets.
Your instinct may be to just ignore those pesky calls once learning the debt is past the statute of limitations. But that tactic could open up a new can of worms and actually breathe life back into those time-barred zombie debts. Here’s a better game plan for fending them off:
Get it in writing
As soon as a debt collector contacts you about a debt you suspect may be past the statute of limitations, the first move is sending them a letter validating the debt’s age, amount, and details. Collectors are legally required to respond with verification documentation. Review that proof against your state’s statute of limitations timeframe for that type of debt.
Don’t admit to anything
In your debt validation letter, avoid resurrecting or “re-aging” the debt by stating you refuse to pay due to it being time-barred. Don’t acknowledge it’s yours or say anything that could be interpreted as admitting fault. That resets the statute of limitations clock in many states.
Send a cease and desist
If the debt details come back confirming it is indeed past your state’s statute, send the collector a cease and desist letter demanding all contact stop due to the age of the debt. Reputable collectors should abide by this. Maintain thorough documentation in case they overstep or you need to push back against any violations.
Check your credit report
Time-barred debts should automatically fall off your credit reports once the statute of limitations in your state expires. But clerical errors can happen, and their presence can still hurt your credit scores. Dispute any past-statute debts reflected on your reports.
Consider the risks of paying
While it may be tempting to just pay an old debt to make it go away, issue any payments very carefully if it’s past the statute of limitations. In certain states, paying even $1 can legally “revive” the debt by resetting the statute clock. Your words matter too – saying “I promise to pay” versus “I may pay if I can” could trigger automatic re-aging.
Are you eligible for a debt relief program?
If your debt is getting out of hand, and you don’t want to breach the statute of limitations, you might want to consider debt relief. At JG Wentworth, we’ve helped countless individuals resolve their debt through our Debt Relief Program.* In fact, if you have $10,000 or more in unsecured debt, there’s a good chance you’ll qualify and get the JGW advantage:
- One monthly program payment
- We negotiate on your behalf
- Average debt resolution in as little as 48-60 months
- 24/7 support
- We only get paid if we settle your debt
If you think you qualify for our program, give us a call today so we can go over the best options for your specific financial needs. Why go it alone when you can have a dedicated team on your side, helping you to avoid having to deal with pesky collectors?
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Explore bankruptcy options
If you are beyond the helping hands of a debt relief program, bankruptcy may provide a path to discharge and wipe the slate clean. Just be aware that bankruptcy’s statute of limitations look-back period when scrutinizing past debts can be much longer, so this tactic should be a last resort.
Understanding your limitations (and options)
The statute of limitations may sound like an obscure legal concept, but it’s a hugely important principle that can ultimately cap your financial liability for old, lingering debts. Being armed with this knowledge gives you substantial leverage when dealing with collectors playing games to revive zombie debt. Don’t let their pressure tactics sucker you into accidentally resetting that debt. With some defensive strategies in your back pocket, you can neutralize even the most persistent debt collectors.
SOURCES CITED
Batdorf, E., “Statute Of Limitations On Debt Collection By State.” Forbes. October 16, 2022.
About the author
* Program length varies depending on individual situation. Programs are between 24 and 60 months in length. Clients who are able to stay with the program and get all their debt settled realize approximate savings of 43% before our 25% program fee. This is a Debt resolution program provided by JGW Debt Settlement, LLC (“JGW” of “Us”)). JGW offers this program in the following states: AL, AK, AZ, AR, CA, CO, FL, ID, IN, IA, KY, LA, MD, MA, MI, MS, MO, MT, NE, NM, NV, NY, NC, OK, PA, SD, TN, TX, UT, VA, DC, and WI. If a consumer residing in CT, GA, HI, IL, KS, ME, NH, NJ, OH, RI, SC and VT contacts Us we may connect them with a law firm that provides debt resolution services in their state. JGW is licensed/registered to provide debt resolution services in states where licensing/registration is required.
Debt resolution program results will vary by individual situation. As such, debt resolution services are not appropriate for everyone. Not all debts are eligible for enrollment. Not all individuals who enroll complete our program for various reasons, including their ability to save sufficient funds. Savings resulting from successful negotiations may result in tax consequences, please consult with a tax professional regarding these consequences. The use of the debt settlement services and the failure to make payments to creditors: (1) Will likely adversely affect your creditworthiness (credit rating/credit score) and make it harder to obtain credit; (2) May result in your being subject to collections or being sued by creditors or debt collectors; and (3) May increase the amount of money you owe due to the accrual of fees and interest by creditors or debt collectors. Failure to pay your monthly bills in a timely manner will result in increased balances and will harm your credit rating. Not all creditors will agree to reduce principal balance, and they may pursue collection, including lawsuits. JGW’s fees are calculated based on a percentage of the debt enrolled in the program. Read and understand the program agreement prior to enrollment.
JG Wentworth does not pay or assume any debts or provide legal, financial, tax advice, or credit repair services. You should consult with independent professionals for such advice or services. Please consult with a bankruptcy attorney for information on bankruptcy.
