What is the Statute of Limitations?
Almost all creditors, reporting on your credit report have a statute of limitations for how long they can attempt to collect on a debt. The statute of limitations is the legal time frame that the debt can be pursued through the legal system.
The statute of limitations is typically based on either your state of residence or the state in which the debt was obtained, as well as the type of debt. Contractual, oral, credit card, and installment debt all have different statutes of limitations.
For Example; Here is a state list of the statute of limitations for credit card debt.
These statutes are important for a few reasons. Firstly, there are some disputes based on the debtor not being able to collect on the debt due to the statute of limitations expiring.
Secondly, this is why your clients probably don’t, in most cases, want to make any kind of payment to a collection company. The time they can collect would then extend from the time your client made their last payment to that collection company or creditor. This is why some collection companies make it so easy for consumers to pay with payments.
According to the Federal Trade Commission, making ANY payment or signing a promissory note to a debtor can reset or restart the statute of limitations, even after it’s expired.
This is why it is so crucial that you have a team of certified credit professionals like CreditFirm.Net working on your credit.
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