Bankruptcy laws vary state by state and can be hard to understand. A large portion of America lives with unmanageable debt with no possible way to pay it off. If you’re drowning under your debt, you might be looking at bankruptcy as a way to get out from under it.
Before filing for bankruptcy, committing to any payment plans, or signing any contracts, you want to figure out what the statute of limitations for your debt is. The statute of limitations is the amount of time that a debt collector has to sue you for what you owe, and sometimes that clock runs out quick.
What to know about the statute of limitations
The statute of limitations on debt collection starts from the time of your missed payment. Often times, it won’t be until a number of missed payments that you start to hear from debt collectors.
When you miss your first payment, that’s when the statute of limitations clock starts ticking. If you make a payment, that clock is reset and doesn’t start again until your next missed payment. The length of time that debt collectors have to chase you down regarding debt depends on the type of debt it is:
- If you owe state tax debt, the statute of limitation is 10 years.
- If you owe credit card or auto loan debt, the statute is 3-4 years.
- Medical debt and mortgage debt don’t run out until 6 years later.
What if debt collectors reach out to you?
Debt collectors might call or email you repeatedly before and after the statute of limitations has run out. The statute of limitations just means they only have a certain limit of time to sue, freeze assets, or garnish your wages to get back their money.
When talking to debt collectors, be sure to be careful with the information you give out. And don’t agree to anything until you’ve had a chance to look over what you owe and what you can pay. If you have any questions regarding bankruptcy law, reach out to an attorney.