What is Statute Barred Debt?
A Statute barred debt is a debt that can no longer be collected from the courts. Most debts have a time limitation, and after a set number of years the debt must be erased. The creditor has six years in which to contact the debtor and demand payment.
If the set number of years has expired and there has been no action taken on behalf of any debt the creditor must free the oblige from this obligation. Once the time has passed the creditor cannot go back and demand action to be taken. After this time he or she has no legal standing.
However states varies in how long collectors have to sue for a debt. Depending on the situation and what arrangements have been made the time limitations on the debt can be restarted. That is why caution should be used when talking to debt collectors. They will try to get the debtor to agree to pay for a debt in advance.
What this does is extend the payment time. For instance, if a debt has not been paid in 5 years and a collector calls and asks the debtor to commit to future payments. If the debtor makes an agreement the debt starts all over again as though it was brand new.
The best way to handle this type of situation is not to talk to or make deals with collectors. There is only one more year left before the debt is erased. Many times than not, the debtor fails to meet the payment arrangement and now has to deal with six more years of aggravation. In order to find out what debts are barred and which ones are not, a research governing each state, and the time of limitation set forth on each debt should be conducted. Identifying what type of debt is in question is helpful in determining how to find out the most accurate information.
In most states a person cannot be sued for debts that are older than the paper they are printed on. In any case, it is important to know if accounts are open end or close end accounts. It is also beneficial to know whether or not the agreement to pay is oral, written, or promissory. This is important to know especially if a lawsuit has been filed. Many cases where the statute of limitation applies this will be a just cause for dismissal.
On revolving credit accounts the stature of limitation starts when the first payment is due. These limitations are set forth by state laws that regulate the use of credit and the interest rates that should be applied. Consumers have rights just as creditors have rights too.
The law is put in place to protect everyone, not just the business owners. Consumers who are not familiar with the law will more than likely fall into a trap setup by the collector. As long as the debtor is loaded with knowledge on what their rights are they will be fine.
Some collectors use various tactics in trying to get old debt renewed. Their main weapon is hoping that the debtor is not up to date on the statutes of limitations. They taunt and harass consumers on end, hoping to trick them into re-establishing an old debt. The debt does not go away, but time limits the methods that creditors and collection agencies can use.
They cannot legally force a person to pay a debt, when the statute of limitation is no longer valid. The only tactics that they have are scare tactics. Creditors are aggressive collectors who have brought the debt from the original creditor for a small amount of money.
They law cannot and will not force individuals to pay debts which have pass law limitations. The creditor can only ask that debtors make their payments in good faith. However, debtors needs to be careful. There is always the possibility of restarting a debt without being aware of it. It is not wise to acknowledge that the debt exists or is owed.
Any mention of any debt could mean being stuck with the same bill for the next seven to ten years. The most important thing to remember when dealing with creditor is they know that they only have a set number of years to legally collect on a debt. When the statue of limitations runs out they have no legal grounds. They only authority they have is what the law allows, and they cannot collect beyond that point.