Why Should You Care About
Why? Because you may currently be undergoing incessant hounding by creditors for debts that you no longer legally owe. If the statute of limitations (SoL) has already expired for that account, you are no longer legally bound to pay it. Many consumers go ahead and pay off the outstanding debt because the accounts will remain on their credit reports; however, they may no longer responsible for the debt.
This information can help you get rid of old debts because creditors have a limited span of time, a relatively brief window, if you will, where they can sue you. The meter on the statute of limitations for credit card debt - or any type of debt starts ticking the day that the debt - or payment on an open ended account - is due. While this does dictate how long a creditor has to press legal action and sue you to obtain repayment of a debt, it does nothing to remove negative credit information from your credit reports.
It is vital to note that the statute of limitations (SoL) varies from state to state, by type of debt and by time frame. See the guidelines for the statute of limitations for credit card debt state by state here.
While the statute of limitations for credit card debt has nothing to do with the length of time that a debt remains on your credit report, there are a few points to consider.
Bankruptcy information remains on your credit report for 10 years. If you undergo a credit check for a job with a salary of more than $20,000 there is no time limitation. A lawsuit or judgment against you can be reported for seven years or until the statute of limitations is up, which ever is longer. Tax liens remain on your report for 7 years from the date that they are paid.
With all the confusion over the statute of limitations for credit card debt - some people are not even sure of the correct term (For example, it is often referred to as the statue of limitations for credit card debt), which can lead to a great deal of bewilderment on BOTH sides of the credit desk. It is important for you to know your rights.
It is equally important to note that just because the statute of limitations for credit card debt or some other type of debt has expired; it does not mean that the creditors will not try to collect the debt. In such a case, when a creditor files suit after the statute of limitations has expired, the consumer has what is called an absolute defense.
The absolute defense that the statute of limitations has expired is proven through documented evidence that is presented to the court. This documented evidence must include specific papers that the consumer files to support the assertion that the statute of limitations has actually expired. This way, if the creditor does file suit against you, you can prove to the court that you no longer legally owe the debt and you will win the judgment. However, if you fail to prove the expiration of the statute of limitations on the debt, a judgment can be filed against you and you will lose the lawsuit.
As a consumer, it is in your best interest to educate yourself on the statute of limitations for credit card debt and other types of debt. Otherwise you may wind up paying debts that you no longer legally owe.
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