What Should You Do If a Creditor Contacts You About an Old Debt?
In some contexts, expiration dates are only a suggestion. Given the high prices of grocery items, most of us have eaten a box of spaghetti or a jar of olives much more recently than the date printed on the package and lived to tell about it. You may have heard that, if you ignore debts long enough, they will go away. While this is true in some contexts, it is much better to address debts that have been following you around for a long time than it is to try to wish them away. The best course of action varies from one debt to another and according to your overall financial situation. For advice about what to do about your debts, including which ones you can safely ignore, contact a Miami debt lawyer.
The Statute of Limitations on Consumer Debt
The term “statute of limitations” means the legal deadline for initiating a certain type of legal action. The statute of limitations for filing a lawsuit against a borrower about an unpaid debt depends on the nature of the debt. If the debt originated from a written contract or promissory note, then the statute of limitations is five years, beginning from the time of the first missed payment. Debts to which the five-year deadline applies include personal loans, car loans, and buy now pay later (BNPL) debts, among others. For debts arising from oral contracts and open-ended agreements, the statute of limitations is four years, beginning on the first missed payment deadline. An oral contract is when someone lends you money and you verbally promise to pay it back by a certain date or to pay installments according to a certain schedule. Open-ended lending agreements include credit cards and revolving lines of credit.
Beware of Undead Debt
When the statute of limitations on a debt has expired, the debt is considered time-barred, which means that the creditor can no longer file a lawsuit against the borrower to collect the debt; the court will dismiss the lawsuit or rule in favor of the borrower. Determining whether a certain debt is time-barred is not as simple as counting five years from the date on the loan agreement, though. Partial payments, and even communications about the debt, can reset the statute of limitations on a debt that has almost expired.
If a creditor sues you about an old debt, you must respond to the lawsuit. You may be able to persuade the judge that the debt about which the creditor is suing you is time-barred, but if you ignore the lawsuit, the court will issue a default judgment in favor of the creditor, which would leave you vulnerable to wage garnishment. A debt lawyer can help you prove that the debt is time-barred.
Work With a Debt Lawyer About Old Debts That Refuse to Go Away
A South Florida debt lawyer can help you respond to a lawsuit about a debt for which you thought that the statute of limitations had expired. Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.