Collection Calls In Which Bankruptcy Had Not Been Filed. Debts That Are Beyond The Statute Of Limitations:
Assuming you have not filed for bankruptcy and the statute of limitations is expired on your debt, the creditor is legally prevented from bringing a legal action against you to recover the debt. The debt is considered time-barred by the statute of limitations. Note however, some states have longer terms and some states have shorter terms. So be sure to check the statute of limitations in your state to be certain.
Does This Mean The Collection Agencies Will Stop Trying To Collect The Debt?
Unfortunately not. Many unethical collection agencies will still contact you and demand that you pay the legally stale debt, even though they know they are legally barred from suing you for it based on the statute of limitations having expired.
The problem here is that many collection agencies will not inform you that the debt is legally unenforceable unless you ask them directly. What’s more, if they convince you to make a payment against the debt, in some states, this partial payment can legally restart the statute of limitations period over again.
How could they do this? The collection agency will claim that by you making another payment you have created a new legally binding promise to pay the debt. In essence, the collection agency will claim you have waived your right to assert the statute of limitations and modified the original contract to pay to extend beyond the original debts statute of limitations period. Many states differ on this issue and you should contact an attorney in your state for advice before you make a partial payment or promise to do so.
Trouble-Tip: Keep in mind that the statute of limitations for a debt is not the same thing as the credit reporting period for your debt. In the case of credit reporting, negative information stays on your credit report for seven years and a bankruptcy for ten years. This means that even though the collection agency can not legally collect on the debt by obtaining a legal judgment against you, they could still report you to the three major credit bureaus. However in most cases, your creditor or its collection agency already has done so. Therefore, in most cases, you would be legally gaining nothing by paying the time-barred debt and you you might as well simply wait-out the time left on your credit report.
Debts Discharged In Bankruptcy – Collectors Can No Longer Legally Collect On Debt – And It’s Unlawful For Them To Knowingly Contact You..
If you have filed for bankruptcy, creditors can not violate the automatic-stay in effect at the time of your filing. Doing so violates the law. Once the bankruptcy is final and your debt has been discharged by the bankruptcy court, generally, the debt can no longer be collected. If they do contact you, they all you need to do is inform the collection agency of the bankruptcy and provide them with the bankruptcy case number and proof of discharge.