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Is There a Statute of Limitations or Can a Debtor Chase Debts Forever?

April 13, 2012 | Comments: 0 | Views: 194

You have a debt incurred several years back and you have not heard from your creditor nor got communications or collection letters from them, do you think that you are off the hook already? You may think that your credit is already written off, but it is not and they can still collect from you. That is if the debt is still within six years from the date the debt was made or if there were payments paid, it is still within six years from the last payment date. In some countries there is a statute of limitations of six years wherein a creditor is barred from their collection efforts after this number of years. However, creditors can still collect if they have satisfied certain conditions that are related to the debts.

Unsecured debts are usually these kinds of debts that are statute barred after six years except under some circumstances. These circumstances are when there is a court judgment made within six years, there were payments made within those six years, or there is an acknowledgement made in writing by the debtor and signed by him. If after six years the debtor will not pay because of that statute limitations he will still be liable because of the signed acknowledgement he made or if there is already a court judgment rendered.

It may not be the same in all countries so you have to check out the statute of limitations in your place. Usually for unsecured loans this is the prescription period or the time wherein creditors can no longer chase for debts if they have not filed for court actions for collection of the debts. If they have made the legal moves then you are still legally obligated. This also means that creditors should take actions for the loans that they give out or they will get nothing if no actions were made during the prescription period.

If you have an unsecured debt that you think is already statute barred but you are bothered by collection agencies collecting from you, you have to check out if there is a court ruling made within the statute limitations period. If you have not signed anything acknowledging your debt you may have a reprieve. However, you have to think also that your creditors will also find means in order to collect. Thus it may be a better move to have some sort of settlement and consideration.

Your creditors may make moves wherein your credit will be compromised and this can stay in your credit score and history for some time. They may also turn-over these debts to collection agencies that will continuously pester you in order to collect. Having a compromise agreement with them may be the better option and propose settlement agreements that will be affordable to you. However, don't just allow yourself to be pushed in order to agree on a settlement that is too high and you cannot afford it. When this situation ultimately goes to legal actions you can just prove that you will settle for payments that are within your means.

Jim Oneil is a writer with a special interest in debt issues and personal finance. He has written for small local newspapers in the past and now devotes part of his time writing about how to get out of debt and also UK based financial products.

Source: EzineArticles
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