DEBT MANAGEMENT » Get out of Debt

Depending on what state you are living in, there is a statute of limitations which limits the amount of time that a debt collector or creditor can sue you to collect a debt. The amount of time is determined by state law but it is usually somewhere between six to ten years, however it can be anywhere from three to fifteen years from the date that the debt was written off. The purpose of the statutes is to allow old debts to fall off of your credit record after a certain amount of time, but still allow the creditor a fair amount of time to collect the debt.

However, if you're thinking of just waiting out your creditors and not paying off the debts you owe, don't go on that celebratory credit card spree just yet. Just because a creditor cannot sue after the statute of limitations has expired doesn't mean that they won't try to get their money back. Debt collectors are not explicitly prohibited from trying to collect time-barred debts; they just can't sue. In fact, if the statute of limitations is about to run on one of your old debts, you may find your phone suddenly ringing with threatening calls from collection agencies who demand immediate payment.

If a debt collector does contact you regarding an old debt, your best recourse is to advise them that the statue of limitations has run out, and tell them not to contact you again regarding the debt. It is important not to make any new agreements regarding debts that are time-barred or about to expire. Do not admit to the debt, do not make any agreements to pay the debt and do not agree to send any money. Agreeing to do so may re-activate the debt and start the time clock running all over again.

Many people are unaware that after a certain amount of time debt collectors can not pursue collection of an old debt. Of course this varies by State law, but the statute of limitations on pursuing a debt is generally between three to ten years. Old debts where the statute of limitations has expired are are called "time-barred debts."

Although the statute of limitations on time-barred debts is determined on a state-by-state basis, the Fair Debt Collection Practices Act (FDCPA) - a federal law, implies that debt collectors are not explicitly prohibited from trying to collect time-barred debts; as long as they do not sue you for the debt. However, if a debt collector threatens to sue you for a time-barred debt, you have the right to get the suit dismissed by letting the court know that the debt is, in fact, time-barred.

Under the Fair Debt collection Practices Act, creditors collecting their own debts (as opposed to organizations or lawyers that regularly collect debts on behalf of others) are not subjected to that federal law. However, you can prohibit debt collectors from contacting you about any debt, regardless of how old it is or even whether or not you owe it; by simply writing them a letter directing them to stop contacting you. Once a debt collector or creditor has received your letter, they are not allowed to contact you any further regarding the debt (except for the specific purpose of telling you that there will be no further contact) or to apprise you of the debt collector's intention to take a specific action.

If you are currently in an unstable financial position, use your communication skills to negotiate with your creditors on lowering your debts and/or interest rates. Just making the effort to work with your lenders to reduce your debt will save yourself lots of stress.

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