Is There a Statute of Limitations on My NJ Debt?

Did you realize that debt has a statute of limitations? This means there is a set time limit during which you can be sued for money you haven’t been able to pay back. If you have a very old debt that you haven’t made any payments on in years, your lender may not be able to legally take you to court even if you never make another payment.

Although the concept of “limitations” on how long your debt can be collected may seem comforting, the process of proving that your debt has exceeded the statute of limitations time limit is actually quite difficult. It’s in your best interest to get as familiar as possible with the laws surrounding the statute of limitations on unpaid debt.

What Is the Statute of Limitations?

In this context, the statute of limitations is defined as a legal time period in which a lender, creditor or debt collector can sue you for money that you have not repaid in accordance with an agreement.

Each state has different laws regarding unpaid debt and the statute of limitations. The confusion and differing state regulations exist because the statute of limitations was not originally intended for the purpose of debt collection.

Because each state has different time limits for different types of debt, you’ll need to know which state your creditor may be suing you in. This in itself can be hard to uncover, because you can be sued in the state in which you reside, the state where you opened the defaulted account, or in the state where the creditor does business.

What Are the Different Types of Debt?

There are actually four different categories of debt, and they include: written contract, oral contract, injury, and property damage. Each of these different categories has a different time limit in each state. You can learn more about your specific type of debt and its time limits in all 50 states here.

You also need to know precisely when the clock started ticking on your defaulted debt. There are many things you can do that will actually “restart” your debt clock, which is why debt collectors are so doggedly determined to get in contact with you.

By making a promise to pay or simply admitting to a debt collector that you owe the money in question, you may start the clock over on your debt’s statute of limitations. Every time you make a payment, however negligible, you are also restarting the clock. So, if the statute of limitations on your unpaid credit card debt is 6 years and a debt collector calls you after 5 years – acknowledging responsibility or making a payment on the debt will reset  the statute of limitations timeline. You will then have to wait another six years for it to run out again.

An important thing to note is that there is no statute of limitations on federal student loans. Just as they cannot be discharged in a bankruptcy, they cannot be avoided due to the statute of limitations. In fact, a defaulted federal student loan can ultimately be taken out of your paycheck until it is paid back. Private student loans, on the other hand, do have a statute of limitations.

If you have an unpaid debt and feel that you will not be able to repay it in the foreseeable future, it is important to know all of the specifics behind the statute of limitations of your particular debt. It is also imperative that you contact a bankruptcy attorney if your debt is something that you cannot keep up with. An experienced bankruptcy attorney will help you formulate an effective way to address your debt. The right attorney can help you by defending you against a debt collector regarding statute of limitations, facilitating loan modifications or helping you file for bankruptcy.

It’s important to work with a qualified professional on this matter because the laws surrounding unpaid debt are confusing and laden with details. In order to avoid doing something illegal and/or getting yourself in even deeper debt, call Veitengruber Law and let us pull you out of debt for good.

Image Credit: Keith Williamson