Debt Consolidation

Understanding Debt Collection Statute Of Limitations

In every state of the United States of America, there are certain laws regarding debt collection statute of limitations. As per these laws, if a certain period of time has passed since the date when the last payment was made on a debt account, the borrower can no longer be held liable to make the repayment. The exact period of time depends on the type of debts. Besides that, the limitations also vary from one state to another. These laws have been introduced with an objective to protect consumers from debt collection harassments. However, borrowers can make the best use of this protection only if they are well aware of the laws applicable in their state regarding this. The more informed you are, the better you can protect yourself. Following is a brief rundown on some of the most important thing that you must know in this regard.

Reporting Period Of A Debt

When it comes to understanding the laws about debt collection statute of limitations, the first thing that is very important for you to keep in mind is that the reporting period of a debt is a different thing. The reporting period is not statute of limitations; instead, it is the period of time a debt stays on the credit report of the debtor. For example, for judgments and bankruptcies, this period is ten years; for negative trade lines, it is seven years. On the other hand, the statute of limitations refers to the time limit for the lenders regarding their debt collection efforts. For example, if they want to file a lawsuit against the debtor to collect debt, they must do so within the statute of limitations. Once that time limit expires, there will be no legal way left for them to collect the debt. The most important thing to note here is that the statute of limitations in most states us usually much shorter as compared to the reporting period.

Resting Of Statute Of Limitations

Another thing that is very important for you to keep in mind about debt collection statute of limitations is that the time limit is calculated from the date when the last payment was made, not from the date when the loan was initially issued. It means if the statute of limitations is two years and the last payment you made was 15 months ago, there is only 9 months left for the statute of limitations to expire. But, if you make even a single payment now, it will reset the time limit back to two years i.e. twenty-four months.

If you have got a legal notice from a lender that they have filed a lawsuit against you to recover the debts while you very well know that the debt collection statute of limitations has already expired, you will still have to attend the court hearing, where you can simply show the documents that should prove that the time limit has already expired. If you do not have the proofs available with you, you can ask the lender to prove that the statute of limitations has not yet expired.


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