It can easily seem like you are in a never-ending cycle when you are in debt. It gets extremely difficult when everyday expenses and bills prevent you from paying off your debt. The penalties for not being able to make payments are frightening, and creditors always seem to be insistent. However, do not feel like you are powerless when you are in the burden of lingering debt. You may be legally protected by the statute of limitations, and this article will be specific to residents of Nevada.
|Oral Contract||4 years|
|Written Contract||6 years|
|Promissory Note||3 years|
|Open Accounts||4 years|
Each state in America enforces statutes of limitations on debt, which is a law that restricts the time within which legal proceedings may be brought upon you by creditors or debt collectors. These statutes are designed to prevent legal action against debts that are considered too old by the government. Once a debt exceeds the statute of limitations, a creditor can no longer legally sue you to have the debt paid off. It is important to know your state’s statutes in order to properly defend yourself.
The statutes of limitations are different per state, and the time limit varies depending on the type of contract. There are four kinds of contracts that can be made. Oral contracts are verbal agreements made by two or more parties. The oral contract is not written down fully or at all, however it is still legally binding under law. Unfortunately, oral contracts are difficult to establish or prove that it even occurred. In Nevada, the limit of time for an oral contract is 4 years.
A written contract includes a loan’s terms and condition, and is signed by both the creditor and borrower. The limit of time for a written contract is 6 years.
Promissory notes are a type of written contract that consists of specific promises to pay. These notes include terms and conditions, interest rate, repayment schedule, and consequences of default. The statute of limitation expires after 3 years for promissory notes.
Open-ended accounts are where an account has a revolving balance that can be repaid and borrowed. The most common example of open-ended accounts is credit cards. Nevada’s time limit for debt of open-ended accounts is 4 years.
In order to be efficiently protected and to properly defend yourself, make sure you keep and organize all your documents when borrowing money or using credit. Remember, situations like debt are extremely time sensitive. The statute of limitations starts on the date you stopped making payment. In Nevada, after a certain amount of years (3-6 years, depending on contract), one may not have to answer a creditor and can stop making any more payments.
Pranjali works for the University Archives at North Carolina State University. She volunteers at Occupational Therapist offices in Charlotte and Raleigh. Pranjali is in the University Scholar’s Program and a member of Psi Chi Honor Fraternity. She is a co-captain of an Indian folk-dance team at NC State.
While she is not busy applying for graduate school, she enjoys working out, traveling, and listening to music. Her interests include fashion, all things French, and spending time with friends and family.
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