I am not sure what you mean by "in the clear". However, I can provide you with information pertaining to how the statute of limitations work.
Statute of Limitations
All states have a body of statutes in their codes of law called, "Limitations of Actions," commonly referred to as the statute of limitations. The idea behind these laws is that we as a society have decided that we don't want old debts hanging around forever — we want people and businesses to be able to move on with their lives without worrying about being sued.
Statute of Limitations Vary by State
The length of time a creditor has to sue you depends on your state of residence and the type of debt. For example, many states allow longer for creditors to file suit to collect on closed-ended consumer loans than on credit card debts. Most states give credit card issuers three to four years to file suit after default, but some states allow as many as 10 years. You mentioned New Mexico in your question. New Mexico's statute of limitations is four years for credit card debt. See the Bills.com Collection Laws and Statute of Limitations page if you reside in another state.
The page I just mentioned has more information about statutes of limitations and a list of limitations by state. If a creditor files a lawsuit after the allowed time, the court will usually throw the case out and not allow the creditor to file suit again (called dismissed with prejudice).
However, you must raise the issue of expired statute of limitations in a written response to the lawsuit, or else the court will not know that the statute of limitations has expired. Although the periods vary from state to state, I believe that there is only one, Ohio, that has a statute of limitations that runs longer than 10 years.
Remember: The passing of a statute of limitations does not mean a creditor may not sue you. It means if a lawsuit is filed you have defense against the lawsuit if you raise the defense in a timely manner. Also, keep in mind that the passage of the SOL does not prevent a creditor from calling you to collect on the debt; it simply provides you an absolute defense in court if the creditor files suit.
It is very important to keep in mind that a debt that has expired due to the statute of limitations can be brought back to life. When a single payment is made by a debtor on an expired debt, the clock can be re-set on the statute of limitations. There are debt collectors who purchase the right to collect on expired debt. They hope that they can pressure someone into making payments on a debt that the debtor no longer has to pay.
If you are concerned with how a charge off impacts your credit report I encourage you to read Charge-Off & Credit Report.
I hope this information helps you Find, Save, and Lean.
Best,
Bill
New York, NY | November 02, 2011
November 02, 2011
- Statute of Limitations. Just because a statute of limitations has passed does not mean a creditor may not collect a debt, except in Wisconsin. The passing of a statute of limitations gives a defendant in a lawsuit an affirmative defense, and nothing more. See Statute of Limitations to learn more.
- Time and Credit Reports. Seven and a half years is how long most derogatory items can appear on a consumer's credit report file. The 7½-year rule has nothing to do with charge off. It does not determine whether the debt is collectible. It also has nothing to do with a state's statute of limitations. See the Bills.com resource Fair Credit Reporting Act to learn more about what can appear on a credit report and for how long.
- Charge-off / write-off. An accounting term that means a creditor has moved an account from its current-accounts book to its general ledger as a bad debt. It does not mean the account is canceled, forgiven, or extinguished. See the Bills.com resource Charge Off for a more complete discussion of this oft-misunderstood phrase.
A collection agent working on a debt older than a state's statute of limitations may contact the consumer to attempt to collect the ancient debt (except in Wisconsin). It can even file a lawsuit against the consumer. However, the consumer has an affirmative defense if there is such a lawsuit.
My advice? Dispute the debt.
Winnebago, IL | May 18, 2011
May 18, 2011
September 20, 2010
Here, the creditor charged-off the account exactly one year too late under FFIEC policy.
September 20, 2010
Loading more commentsSince you don't have facebook, please provide us with your location and a valid email address so we can answer it. Without a valid email address,we can't reply. (Go back to login with Facebook)
Due to the high volume of comments received, we cannot publish and/or respond to every comment received. If you have a specific question, we recommend you search our site for an answer before commenting.
* Bills.com will not share, sell, lend, or make public your e-mail address. We reserve the right to delete any questions or comments that violate the Bills.com terms of service.
We get a lot of comments! To help us show our boss that this is a valuable service, so we can keep providing it, we ask you to do 2 things before commmenting:
Log in
Like us
Submit your comment!
Due to the high volume of comments received, we cannot publish and/or respond to every comment received. If you have a specific question, we recommend you search our site for an answer before commenting.
* Bills.com will not share, sell, lend, or make public your e-mail address. We reserve the right to delete any questions or comments that violate the Bills.com terms of service.
Thank you for your comment. Your comment will be posted shortly.
Comments (6)