Have you ever had a debt get tossed from one collector to another like it was a game of “hot potato?” It probably felt like it was just going on and on, and was never going to end. However, at some point, this cycle has to stop. This is what is called the statute of limitation on debt. Once a debt passes the statute of limitations in that particular state, a debt collector no longer has the right to sue you for payment.
|Oral Contract||6 years|
|Written Contract||6 years|
|Promissory Note||6 years|
|Open Accounts||6 years|
There are four different types of debts to which the statute of limitation can apply:
- Oral Contract – This is a verbal agreement, in which no contract is written or signed when the agreement is made. These are legally binding, but are harder to prove in court.
- Written Contract – This is an agreement made on a printed document which is signed by both parties. These are easier to enforce than oral contracts.
- Promissory Note – This is like a written contract, but has more details. It includes the interest rate, repayment schedule, and consequences of default.
- Open-Ended Accounts: This is an account that has a varying, revolving balance (i.e. credit card).
For the state of Massachusetts, the statute of limitation on all four of these types of debts is 6 years.
However, there are a few things that the statue of limitations does not do. It does not keep a debt collector from filing a lawsuit against you, but it can keep them from winning if you use it against them in court. Also, it does not just magically erase the debt. If the debt is legitimately yours, then you still have to pay it off. Lastly, it does not prevent the debt from being reported on your credit report. The debt can be reported for as long as the credit reporting time allows it.
Do not let yourself be harrassed by debt collecting agencies over and over again, especially if the statute of limitations has expired. Make the cycle stop, or else it is just going to keep going round and round!
Every summer, Archana works at Kumon, a math and reading workshop, tutoring children between the ages of three and 18 in these subjects. She used to be enrolled in this program herself, so this allows her to connect with the students and give them the one-on-one help that they need. Archana is also currently a member of NC State’s Psychology Club, Rotaract Club, and EKTAA (NC State’s premiere South Asian Student Organization).
Archana was born in India, and moved to North Carolina with her immediate family when she was 7 years old. She speaks mostly Tamil, the native language of South India, and English in her home. In addition, having taken Spanish classes since 6th grade, she can speak and understand it pretty well too. Archana enjoys spending time with her family and friends, watching movies, listening to music, and going to the gym. She also loves to travel, and hopes to travel the world one day and learn about all the different cultures!
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