Let Sleeping Dogs Lie – Don’t Pay Your Ancient Debts

If a creditor waits for too long to collect and old debt, you may not have to pay it. All states have statutes of limitations – laws which require that a creditor sue to collect a debt on or before a certain date. If they do not file a lawsuit in time, then they are forever barred from suing to collect the debt. A lawsuit is filed when the complaint been filed with the proper court, and a filing fee has been paid. A complaint is the document where the creditor states to the court that you owe them money and provides the reasons for that claim.

Each state has statutes of limitations for certain types of debt. There are four types of debt. Oral Contracts are those where you verbally agreed to pay the debt. Written Contracts are those where you agreed in a signed writing to pay your debt. A Promissory Note is a written document you sign where you agree to pay the principal and interest on a debt according to a schedule. Finally an Open Account a rotating line of credit with a changing balance. Some states have the same statute of limitations for all types of debt, others have different ones.

When does the statute of limitations start? It starts when you miss your first payment. You can check the date of last activity on an account by obtaining a copy of your credit report.

Some collection companies specialize in buying debts whose statute of limitations has expired and trying to collect them. They try to get you to agree to make payments on the debt. By agreeing to make the payments, and making them, they create a new debt with a new statute of limitations. In a sense, they revive the old debt.

If you notice old debts on your credit report, or if a collector contacts you, before deciding to pay them or settle with the collector, talk with a lawyer in your state to see if you really owe the money. If you get sued on an old debt, make sure to claim the statute of limitations defense in your answer. If you don’t file an answer or don’t claim the statutes of limitations as a defense, you will lose your case.

Here is a table showing the Statute of Limitations in all 50 States. Most states have laws that stop the statute of limitations from running out if you are outside of the state or country. Also, some contracts have a provision that says that any lawsuit will be governed by the laws of another state. If you are sued, you should check with a lawyer to see if the statute of limitations defense applies to your debt.

State	Oral Agreement	Written Agreement	Promissory Note	Open Account
Alabama	6	6	6	3
Alaska	6	6	6	6
Arizona	3	6	5	3
Arkansas	3	5	6	3
California	2	4	4	4
Colorado	6	6	6	6
Connecticut	3	6	6	6
Delaware	3	6	6	3
D.C.	3	3	3	3
Florida	4	5	5	4
Georgia	4	6	6	4
Guam	4	4	4	4
Hawaii	6	6	6	6
Idaho	4	5	10	4
Illinois	5	10	6	5
Indiana	6	10	10	6
Iowa	5	10	5	5
Kansas	3	5	5	3
Kentucky	5	15	15	5
Louisiana	10	10	10	3
Maine	6	6	6	6
Maryland	3	3	6	3
Massachusetts	6	6	6	6
Michigan	6	6	6	6
Minnesota	6	6	6	6
Mississippi	3	3	3	3
Missouri	5	10	10	5
Montana	5	8	8	5
Nebraska	4	5	6	4
Nevada	4	6	3	4
New Hampshire	3	3	6	3
New Jersey	6	6	6	6
New Mexico	4	6	6	4
New York	6	6	6	6
North Carolina	3	3	5	3
North Dakota	6	6	6	6
Ohio	6	15	15
Oklahoma	3	5	5	3
Oregon	6	6	6	6
Pennsylvania	4	6	4	6
Puerto Rico	15	15		3
Rhode Island	15	15	10	10
South Carolina	10	10	3	3
South Dakota	6	6	6	6
Tennessee	6	6	6	6
Texas	4	4	4	4
Utah	4	6	6	4
Vermont	6	6	5	6
Virginia	3	5	6	3
Washington	3	6	6	3
West Virginia	5	10	6	5
Wisconsin	6	6	10	6
Wyoming	8	10	10	8
Virgin Islands	6	6	6	6

Garnishment: Facts You Need To Know

Garnishment: Facts You Need To Know

Garnishment permits a creditor to take your wages or bank account balances collect your debt. It works like this. The creditor gets a judgment against you from a court. A judgment is an order from the court telling you to pay the creditor. The creditor then gets a Writ of Garnishment from the court. That is an order from the court requiring your bank, or your employer, to pay your account balance or wages to the court. The court then turns the money over to your creditor. Before the court pays the money to the creditor, they give you a chance to show why the money shouldn’t be paid.

Before a creditor can garnish your account, they must have a judgment against you. There are two exceptions to this rule. First, tax authorities such as the Internal Revenue Service can garnish your accounts without first obtaining a judgment. Also, in some states, your wages and accounts may be garnished to collect unpaid child support.

Even if your paycheck or bank account is garnished, you may be able to get back or keep some of the money. Each state has different rules regarding exempt property --property that your creditors cannot touch. The most famous example of exempt property is O.J. Simpson’s $25,000 per month NFL pension. Even though he has judgments against him in excess of thirty million dollars, his victims’ parents cannot take any of Mr. Simpson’s pension payments.

In some states, all or, or a part of your wages are exempt. Most retirement plans are also exempt. Also, social security, SSI and disability payments are exempt. If you can prove to the court that the money in your account comes from these sources, you may be able to have it returned to you.

If you learn that a creditor is trying to garnish your paycheck or bank account, you should contact a lawyer immediately. If you did not have notice of the lawsuit, or if you are not the person named in the lawsuit then the judgment can be set aside. Also, if you file for bankruptcy, the garnishment will be stopped.

Debt Collectors Revealed: 5 Lies We Tell Consumers (And How to Stop Them)

Here is my list of the top five lies debt collectors use to get people to pay:

1. If You Don’t Pay We Will Garnish Your Account.

Only the IRS, State Taxing Authorities, and Child Support Enforcement have the power to garnish your account without first suing you, winning, having the court issue a writ of garnishment and then garnish your account. Unless you have been sued and had a judgment taken against you, they can’t garnish your account.

Do you really think that they will garnish your wages because of a 5 year old unpaid library fine? How about an old bill from Time Life Books? Of course not, here is why:

First, the debt collection company has probably bought this debt for pennies on the dollar, or even pennies per hundred dollars. Anything they get will be profit. Second, the debt collector is probably a minimum wage employee at a call center located out of state, or even outside the United States. They make many calls per hour and are after the easy payments. Lawsuits cost money. Even if they win, they won’t normally get their attorney fees as part of the judgment.

2. If You Don’t Pay We Will Have to Inform The Credit Bureaus.

Guess what. If the bill collector is calling, the credit bureaus have already been notified. Bad accounts hurt your credit score for approximately two years from the time that they are first reported. In other words, if the debt was reported more than two years ago, it doesn’t hurt your score anyway. In fact, by paying it, you may do more harm to your score than by ignoring it. Also if the collector makes this threat and doesn’t follow through they have violated federal and state law by threatening action that they do not intend to take.

3. We’re Going to Take Your House Unless You Pay Immediately.

Again, it is illegal for a collector to threaten action which they do not intend to take. Unless the creditor has already obtained a judgment, or is your mortgage company, your house is safe.

4. If You Don’t Pay Today, A Warrant Will Be Issued For Your Arrest.

In the United States, being in debt is not a crime. You cannot be arrested or imprisoned merely because of debt.

5. Pay Up Or We’ll Hurt You.

This is the old gangster, loan shark, or Tony Soprano trick – threaten violence in order to get paid. It is also known as robbery, attempted robbery, menacing and/or extortion – all of which are serious felonies. The Fair Debt Collection Practices Act specifically prohibits threatening violence against any person or their property in order to collect a debt.

If a debt collector tries this or any of the other lies above, here is how to handle the situation. Get the collector’s name, company name and telephone number. Write down the date and time of the call, as well as any threats made by the collector. Even better, get a tape recording of the threats being made. File a report with your state’s collection bureau licensing board, state attorney general, or local police department. Under federal law, the collector may be liable for damages of up to $1000 plus court costs and attorney fees. You may be able to have the entire debt cancelled under your state law.