The Attorneys Of Stewart Sorice Farrell Finoli And Cavanaugh LLC

What is a time-barred debt?

On Behalf of | May 21, 2020 | Bankruptcy |

An important part of the process when filing for bankruptcy is to make sure that you include all of your debts in your paperwork. If you fail to include a debt, the court cannot discharge it, which means the creditor can proceed to try to collect it after your bankruptcy case concludes. 

However, you also want to be sure the debts you include are valid. In some cases, you may have time-barred debts, which the FTC explains are debts past the statute of limitations for collections. These debts are those which a creditor can no longer legally hold you responsible for. It can try to collect them, but cannot take legal action against you to collect. 

Statute of limitation 

A statute of limitations is the amount of time in which something can legally happen. In the case of debts, it is the number of years from which you stop paying on the debt in which your creditor may collect on it. If you do not pay a debt and the statute of limitations expires, then the creditor has no means by which to make you pay it. 

Important points 

It is possible to reset the timer on a debt. Certain actions you take, such as making a payment, can move the statute of limitations end date. In addition, a creditor may be able to report a time-barred debt on your credit report as the rules for reporting are different from collection laws. Also, a creditor can still try to collect on a time-barred debt. It must follow fair debt collection laws and cannot threaten legal actions, but it can still call you or send you something in the mail to request payment.