There is a common legal term that you may have heard before called a statute of limitations and this determines the length of time that a person has to file a legal proceeding. In the state of California the statute of limitations on most types of debt is four years with some limited exceptions. Dead buyers and creditors can’t sue to collect debt that’s more than four years old and when debt is based on a verbal agreement, this time can be reduced by two years. Determining whether your debt can be collected comes down to the options that are available to debt collectors and the types of representation that you have working for you.
When a Debt Can No Longer Be Collected
The statute of limitation doesn’t begin as soon as you enter into a contract for your debt. Understanding when your debt will start to expire means considering the circumstances of your debt. Certain actions can restart the statute of limitations whether it’s through extending your statute under California law or missing some of your payments. Under California law, you could find yourself in a situation that could restart your consumer debt payments when you make another payment on a debt that has been long-standing.
If you took added to your loan from a traditional finance company, major payment for four months, and then stopped making payments the statute of limitations on the collection of the debt would begin to run the first month that you missed a payment. As soon as you make a new payment, the four-year statute of limitation will start up again and eight fresh four-years of limitations will be added to the process of the debt collection.
A statute of limitations isn’t just so the debtor can have a form of defense. A statute of limitation also prohibits creditors and debt collectors from starting up lawsuits to collect the debt early on. It was fairly common practice for many creditors to start filing lawsuits before the statute of limitations before this was put into place. Many debtors were not aware of these concerns and it would often lead to people facing judgment or failing to appear in court, even though they would not be legally considered for the debt.
By having a statute of limitation in place and some form of legal knowledge backing a person that is facing a debt collection, it’s possible to prevent collection activities from affecting somebody’s life.
Credit Reporting Can Also Have Its Limitations
Pursuing debt collection is a separate process from the amount of time that debts will be in place on a credit report. Entries on your credit reports need to be deleted every seven years and this means that there is likely a three-year period when a debt is no longer collectible but the debt will continue to appear on a person’s credit report. Having this in place could make it very difficult for you to apply for various financial products or for securing major purchases.
If you are facing financial difficulty with the chance that you could be sued for debt collection in the state of California, contact our staff today. We can help you seek debt relief and determine if your debts can be collected legally.