What Is Time-Barred Debt?

Time-barred debt is money that you borrowed and didn’t repay, but which is no longer legally collectable because a certain number of years have passed. Time-barred debt is also known as debt that is beyond the statute of limitations. Learn more abo🔜ut what 🐼defines time-barred debt and how it can still affect your credit.

How Time-Barred Debt Works

When a 澳洲幸运5官方开奖结果体彩网:debt collector contacts ▨a borrower about repaying an old debt, the law distinguishes between debt that is still subject to collection and debt that cannot be collected due to its age. Because borrowers are not legally obligated to repay🌺 time-barred debts, they should be careful how they deal with these requests.

澳洲幸运5官方开奖结果体彩网:Creditors and debt collectors may attempt to sue borrowers to collect a time-barred debt, although that is illegal. If the suit goes to court anyway, the judge should dismiss the case because the statute of limitations has run out. However, experts advise debtors to respond if they are sued and not to simply ignore the matter.

Note that in some states, if a debtor acknowledges that they owe the debt or makes even a small payment on it, the statute of limitations will reset and the debt will no longer be time-barred until the statute of limitations runs out again. During that period, the debt collector can also sue them.

A particular breed of debt collectors, called 澳洲幸运5官方开奖结果体彩网:zombie debt collectors, specializes in trying to collect time-barred debts. These debt collectors buy very old debt for as little as two cents on the dollar and then get to keep 100% of whatever 💞they manage to collect.

When Does Debt Become Time-Barred?

The statute of limitations for debt collection is governed by state laws and generally ranges from three to six years, though it's as long as 10 years in some cases. Within a given state, the statute of limitations on debt can also vary depending on the type of debt involved (credit card debt vs. mortgage or medical debt, for example).

The statute of limitations clock usually starts when the borrower misses a payment.

If you have old debts that you have been unable to repay, it's worth checking on the statute of limitations for debt in your state. Knowing your rights can help you respond appropriately to debt collectors if they call.

Example of Time-Barred Debt

Let's say you reach your maximum credit card limit of $5,000 and cannot keep up with the minimum payments. You do not pay and your debt becomes delinquent.

This delinquency caused debt collectors to call you to try and recoup the funds. But they were unsuccessful in collecting the money because you still cannot afford t🌳o pay. Three years later, the credit card debt becomes time-barred debt under the laws in your state. You still owe the debt, but you are now under no legal obligation to repay it.

Your Rights If You Have Time-Barred Debt

It is illegal for a debt collector to sue a borrower over a time-barred debt. In some states, it is even illegal for a debt collector to contact you in connection to one. If your state does allow debt collectors to contact you, they are not allowed to threaten to sue you over the debt. You also have a legal right to tell a debt collector to stop contacting you, and they are required to comply.

If a debt collector breaks the rules, you can report them to the Federal Trade Commission, the Consumer Financial Protection Bureau, and your state attorney general's office. You also have the right to sue the debt collector.

The Bottom Line

If you owe a debt that is time-barred, you might feel a moral obligation to repay it even if you no longer have the legal obligation to do so. Paying off a debt that is no longer legally collectable may seem illogical. However, there are practical reasons to repay it. Bad debts stay on credit repor🙈ts for seven years, so a debt that is time-barred can continue to har♏m your credit score.