At Daic Law, clients regularly ask us what to do about old debt. We’ve all been there. A sudden incident, illness, or life event that took us by surprise and left us with a bill. Sometimes we even have bills that we don’t know we owe until someone contacts us months later. This is a frustrating experience, and leaves us with many questions about what to do.
What to Do About Old Debt
Below, we offer some answers that will hopefully help you understand your position and your legal rights. If you have questions about old debt, please do not hesitate to contact us directly to learn more.
What is Old or time-barred Debt?
Old debt is debt that you may or may not realize that you owe that is more than a few months or years old. The legal definition of old debt is ‘time-barred debt’. This type of debt can be defined as,
“money a consumer borrowed and didn’t repay but which is no longer legally collectable because a certain number of years have passed.”
How Long Can Debt Collectors Pursue an Old Debt?
In Texas, there is a statute of limitations on debt. That’s right – once a certain period of time has passed, debt collectors are prohibited from suing consumers to recover debt.
Before Texas law changed establishing the statute of limitations for old debt, debt collectors could continue to contact consumers. If consumers made a payment or acknowledged the debt, the statute of limitations would restart. This resulted in what is called ‘zombie debt’. In these cases, the statute of limitations could be constantly restarted, which created problems – and a lot of anxiety – for consumers.
Do I Have to Repay Old Debt?
If you legitimately owe the old debt, you may find it in your best interests to repay it. But not everyone has the ability to do so. Furthermore, sometimes people get stuck with debts that aren’t really theirs. Here’s a few things to consider about repaying old debt:
- Paying Nothing: If you pay nothing, the debt collector can’t sue you. However, they can keep contacting you unless you tell them to stop.
- Making a Partial Payment: If you make a partial payment on an old debt, it could revive the debt and reset the statute of limitations. If that happens, the debt collector once again has the ability to sue you for the full amount of the debt.
- Paying Off the Debt: If you pay off the debt – either in full or through a negotiated settlement – you will no longer be responsible for the debt. Paying off the debt can prevent future debt collection actions, but you may still see the debt on your credit report.
How do I Know if My Debt is Time-Barred?
The first step in knowing if your debt is time-barred is asking the debt collector for a copy of your records. Take note of when the last payment was made. Next, contact a debt defense lawyer to find out what the statute of limitations is in your state. The statute of limitations may vary depending on the type of debt. In Texas, the statute of limitations for debt is four years.
Can Debt Collectors Still Contact Me after the Statute of Limitations Expires?
In many states, debt collectors cannot legally contact you about a time-barred debt. However, in other states, they can contact you, but they cannot threaten to sue you. In Texas, the debt collector can contact you, but if you demand that they stop, they must do so.
Does Old Debt Stay on my Credit Report?
Yes. Past due debts, even if they are time-barred, can appear on your credit report for up to seven years. Even if the debt collector is not pursuing the debt, it can negatively affect your credit score.
What Should I do if I’ve Been Sued for a Time-Barred Debt?
If you are subject to a debt collection lawsuit, the first thing you should do is contact a lawyer. It is important to respond to the lawsuit in a timely manner in order to avoid the creditor getting a default judgment against you.
When Should I Contact a Lawyer?
If you have old or new debt that you are struggling to pay, debt collectors that are hounding you, or have been sued by a creditor, it is never too soon to contact a debt defense lawyer. In fact, it is a good idea to contact a lawyer as soon as possible. There are specific laws in place to protect consumers from unfair or unethical debt collection practices. A lawyer can help ensure that your rights are protected.
Get a Free Consultation with Daic Law
If you have questions about debt collection, old debt, or debt collection lawsuits, contact Daic Law. Our professional debt defense lawyers know how to protect your rights and help you resolve your debt. Call us at 877-893-6040 for a free consultation with one of our lawyers. No matter how old your debt is, we can help you secure the best outcome possible.