A statute of limitations (SOL) is the time period during which a creditor can take legal action (i.e., sue the debtor) to enforce a debt. Each state has defined its own statutes of limitations, and they vary significantly.
For example, in your state, New York, creditors have six years to sue a debtor to enforce a debt, while in Rhode Island creditors have 10 years. To learn more about statutes of limitations for the collection of debts, see the Bills.com resources How to Tell Which Statute of Limitations Applies to Your Situation and Statute of Limitations Laws by State to learn basic information about consumer rights in each state. Debtors should consult with an attorney in their state who has experience in debt law to determine if the statute of limitation for the creditor to sue has expired.
If a state’s statute of limitation for the collection of debts has expired, the likelihood of the creditor attempting to sue the debtor to enforce the debt is much less. While the passing of the statute of limitation does not mean that a creditor cannot file a lawsuit, if one is filed the debtor has a defense against the lawsuit.
In most states, the statute of limitation begins running from the date of last payment on the account. This means that if the debtor paid just a few dollars to a collector a couple of years ago, the running statute of limitation for that debt could have been reset. Also, keep in mind that the passage of the statute of limitation does not forbid a creditor from calling to collect on the debt — it simply provides an absolute defense in court if the creditor files suit and the debtor/defendant raises the defense in a timely manner.
New York Statute of Limitations
According to the Laws of New York CVP Article 2 § 213, a plaintiff has six years to take action on a contractual obligation or liability.
Here, it is unclear from the facts provided how the statute of limitations applies to your question. If, to add hypothetical facts to your question, the creditor is asking for additional payments on a vehicle that was paid for completely seven years ago, then the statute of limitations bars the creditor from using the court to collect the alleged remaining payments. (Assuming the debtor raises the statute of limitations defense in a timely manner.)
Or, let us say for the sake of argument that payments for the vehicle stopped and the vehicle was repossessed. The creditor has six years under New York law to file a lawsuit to obtain the deficiency balance.
Or, let us say for the sake of argument payments halted, the creditor sued for breach of contract and obtained a judgment. Under New York law, the statute of limitations to collect a judgment is 20 years.
See the Bills.com resource Collection Laws to learn about collection laws in other states.
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