Understanding Time-Barred Debts - The Law Office of Michael A. Ziegler, P.L.

Understanding Time-Barred Debts


May 20, 2014

If you have accumulated old unpaid debts in your name and you don’t know how you’ll pay for all of them, then it’s time you learned about time-barred debts and how they can affect you.

What are time-barred debts?

Simply put, time-barred debts (also referred to as “past the statute of limitations”) are debts that can no longer be collected through suing the debtor because a certain amount of time has passed.

What types of accounts are affected by time-barring?

In some way or another, all debts are affected by time-barring, but the rules are different depending on what type of debt you have. More specifically, you’ll need to find out if it’s based on an oral contract or a written agreement. The answer to this question may not be as obvious as you’d think. For example, when you take out a credit card, you may not sign a contract, but you do sign the back of the card and you receive a written cardholder agreement. The type of debt you have determines how long the creditor has to collect.

In Florida, the general rules of thumb is that a creditor has four years to collect on a debt based on an oral agreement, and five years on a written contract.

What are the steps to find out if my debt is time-barred?

Once you have determined the length of time the creditor has to collect, then you have to determine when the clock starts ticking for the lender to collect on the debt. The starting date can be different for a close-ended account, an open-ended account, or an installment loan agreement.

A close-ended account is a one time purchase, such as a car loan. An open ended account is like a credit card account where the balance can grow and shrink over time. An installment loan is a special type of close ended account where the borrower promises to make smaller payments over time.

Since the statute of limitation varies depending on what sort of credit-account you owe, sometimes it can be difficult to determine which type you have. In order to make sure that your accounts are clearly defined and your debts are properly taken care of, it may help you to discuss your options with a debt settlement lawyer in Clearwater. That way you can make the most of your situation.

Choose your words carefully.

Remember: no matter how aggressive the collector, if they’re past the statute of limitations, you don’t have to pay. However, there can be situations where a borrower could re-start the statute of limitations. Each state has varying rules and limitations for the amount of time collectors have; if you’re calling to check on your debt’s status, be sure to choose your words carefully.

If you have verified that the statute of limitations has passed, make sure not to revive the statute of limitations as this will start your account’s time all over. Your account can be revived if you make a partial payment, so make sure to understand your state’s laws on reviving a credit-account. Having an attorney who’s looking out for your best interests could be the difference between success and failure.

What if the lender keeps on trying to collect on a time barred debt?

If a persistent lender continues to try to collection on a debt that has passed the statute of limitations, you may be entitled to sue them for illegal collection activity. This is especially true if the lender continues to contact you after you have asked them to stop. Even if a lender has sued you for a time barred debt, you may still be entitled to sue them and dismiss the lawsuit.

If you’re unsure about how to proceed with your debt, be sure to seek the help of a legal professional, like a Clearwater debt settlement lawyer, so that you know exactly how to work through your debts.

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