Debt collectors have certain number of years (known as statute of limitations period) to sue you in order to collect on a debt. After that, your unpaid debts become ‘time-barred’ – means that a debt collector cannot sue you for the debt (though you still owe).
Since the statute of limitations varies from state to state and under certain circumstances, the debt clock can be reset. Therefore, as per the Federal Trade Commission (FTC), a debtor should be aware of his/her rights under the Fair Debt Collection Practices Act (FDCPA) if a collection agency contacts you about an old debt.
When a debt becomes too old to collect?
Technically, state law determines the period of the statute of limitations. The debt clock usually starts ticking whenever you fail to make a payment and stops once the state specified statute of limitations period for the certain debt ends. In most states, the statute of limitations period tends to range between 3-6 years. To know about the statute of limitations on different kinds of debt in your state, visit our page on SOL laws.
Should you pay on a ‘time-barred’ debt?
It depends completely on you. You have certain options and each of those has specific consequences. So before you go further with an option, talk to your lawyer.
Option 1: Pay nothing on the debt
Though the collector may not sue to collect on the debt, you still owe it. The collector can, however, continue with his collection activities unless you send a cease and desist letter demanding an immediate cease on all communication. However, not paying a debt may lower your credit score and make it harder to obtain credit in future.