Statute of Limitations
By
Sybria White on July 22, 2010
A
statute of limitations may sound like a familiar concept, because it is traditionally associated with the legal system. In legal terms, a statute of limitations is “an enactment in a common law legal system that sets forth the maximum time after an event that legal proceedings based on that event may be initiated”
1. In other words, it is a time frame in which legal action may be pursued. For this article, this same concept will be applied to your fiscal matters. To be specific, this article will address how the statue of limitations applies to debt. A statue of limitations on debt, means your debt has an “expiration date” of some sorts and when this date is reached, it may no longer be necessary for you to pay off this debt
2.
Statue of Limitations on Debt vs. Credit Reporting Time Limit
A credit reporting time limit, is a time limit concerning debt, but it differs from the Statute of Limitations on Debt. A Credit Reporting Time Limit is the deadline credit agencies can report delinquent debts on your credit report
2. This time is usually seven years after the relevant delinquent debt
2. By contrast, the statue of limitations for debt is a period of time that a creditor or debt collector can use legal action to pursue a debt
2. It is important to know the difference between these two terms.
Length of Statue of Limitations
Sometimes your debt can be passed from one debtor to another, but when you statue of limitations on the debt is reached, you may not have to pay. Typically, the statue of limitations begins on the last date of activity on the account
2. The time limit can vary by state, it can range from three to six months or it last up to 15 years
2. See a list of
statute of limitations by state.
It is important to look up your statute of limitations for your debt. If you are sure it has passed you should not begin payment on this debt, because this will effectively start the period for the statue of limitations all over again.
Sources:
1http://en.wikipedia.org/wiki/Statute_of_limitations
2http://credit.about.com/od/debtcollection/a/soflimitations.htm