Research Papers on the Statute of Limitations on Debt
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The statute of limitations on debt varies depending on state and the kind of debt. The following characteristics of debt involve consideration of the statute of limitations:
- Once a debt surpasses the statute of limitations, debt collectors no longer have the right to attempt to sue an individual for what is owed.
- Should a debt collector continue to pursue legal action over a debt that is beyond the statute of limitation in an individual’s home state, he or she then violates the Fair Debt Collection Practices Act.
- Depending on the type of agreement made, the time frame for the statue of limitations varies.
The different types of agreements related to debt are:
- Oral contracts
- Written contracts
- Promissory notes
- Open-ended accounts
Most consumers are unaware of the amount of time which has truly lapsed when reconciling unpaid debt. As such, many consumers end up paying a debt off in any event because it still appears on his or her credit report. Per the Fair Debt Collection Practices Act, the statute of limitations begins from the day the debt or payment on an open-ended account was due.
It is important to note that this has very little to do with how long a negative credit item can remain on an individual’s credit report. Further, simply because the statute of limitations has surpassed does not automatically mean that the debt diminishes after it expires. Lastly, the statute of limitations begins to run out once the terms of the original agreement has been breached which usually occurs when an individual fails to make payments as agreed, thus initiating the creditor to demand full payment or some form of restitution.