Even though a debt is barred by the statute of limitations, it does not mean that you don’t owe the debt. The statute of limitations is a legal defense – it only applies in court. That means that a debt collector is free to continue to try to collect on the debt. Should you pay? While you may no longer have a legally enforceable duty to pay, you may still have a moral duty to pay your bills. More importantly, you may have good reasons for wanting to pay, such as refinancing your home or getting a car loan at a decent rate of interest.
For debts that you believe may be time-barred, never agree that this is your debt or make a partial payment thereon without first talking to a lawyer and being apprised of your rights. Even if it is your debt and you feel obligated to pay, don’t just pay. If you want to pay something, that is fine, but you don’t want to accidentally revive the statute of limitations. Also you may settle a debt with a debt collector only to find out that the balance on the debt has been re-sold to another junk debt buyer, and unless you have proof then you may end up having to pay the same debt twice.
I thus recommend that you get an attorney to make sure that the debt is resolved correctly. However, if you are doing this on your own, always get a written agreement with the debt collector as to the terms before you pay. Never pay by a check by phone, credit card or personal check. Instead, get a cashier’s check or money order, make a copy of it and send it either by certified mail, return receipt requested or by UPS or FedEx (if the latter, make sure that you get the debt collector’s physical address). Once the payment is received, usually about 30 days later, call the debt collector and get a settled-in-full letter acknowledging that your payment was made and that no further monies are owed. Keep a copy of the check/money order and the letter forever as debts have a way of re-surfacing (see Zombie Debts)!
The above process is for resolving debts that have not been litigated. Resolution of judgments is the same, but there are a few other wrinkles you need to be aware of. First, the statute of limitations governing the time in which suit must be brought does not apply. Nor does the length of time that a debt can be reported on your credit matter either. Judgment debts last FOREVER. They never go away even if they fall off your credit report after seven years. Judgments are enforceable for a set length of time as per statute (in NC, its 10 years but the judgment can be renewed for another 10 years, so it may be 20 years; in GA, a judgment can be renewed after 7 years and in PA the judgment on real property can be renewed for 5 years but is good for 20 years on real property). What this means is that the judgment can be enforced through garnishment of your pay (if applicable; most states allow wage garnishment although NC and PA do not at this time), seizure of assets owned free and clear, levy on bank accounts or through enforcement of a lien on real property.
Unlike with a non-legal debt, judgment debts must be resolved if you want them to go away – they either get dismissed through bankruptcy or you pay it off, either in full or through settlement. If you pay it off via settlement, you get a settlement letter, pay by cashier’s check or money order and send the payment via certified mail or by UPS/FedEx. Once the settlement funds clear, the creditor or its attorney will be responsible for marking the judgment satisfied. Make sure this is done by going to the courthouse and getting a copy of the filed satisfaction or release of judgment. If it has not been done, most states have a law requiring that it be done approximately 60-90 days after payment. If it has not been done, you can try calling the law firm and reminding them at the time you get a closure letter. Wait 30 days. If it has not been done, then you must write a demand letter to the creditor or its attorney reminding that the judgment was settled, that settlement funds were paid (include copies of the settlement letter and check/money order) and note that you are making a formal demand to satisfy the judgment as per state law. See my article entitled Options for Resolving debt at http://www.rachelhunterlaw.com/options-resolving-debt/ for a discussion this. Again, check with the court to make sure that the satisfaction has been filed. If not, then you need to get a lawyer.
Copyright (c) 2012 & 2014 by Rachel Lea Hunter
www.rachelhunterlaw.com
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