The Aspen Institute states that those who struggle to pay debts are much more likely to encounter depression, anxiety, and other mental health problems. Many Americans worry about debt, and this anxiety may continue to rise as time goes on. However, Americans should know that after a certain amount of time, their money issues could disappear thanks to something called “the statute of limitations” on debt. This law could prevent creditors from collecting, and it is a concept that debtors should strive to understand if they are serious about effective debt resolution strategies. Debt-related mental health issues can become overwhelming, but they do not have to last forever. To learn more about debt resolution strategies, consider working with an experienced lawyer in Tennessee. King Law Offices might be able to offer assistance with collections issues, and interested parties may dial (888) 748-KING to learn more about potential strategies. Our offices serve residents in Washington County, Tennessee.
What Is the Statute of Limitations on Debt?
A “statute of limitations” is a legal time limit. Once this time limit expires, legal action is no longer possible. There are statutes of limitations on virtually every type of legal action imaginable, from criminal charges to personal injury lawsuits. Since debt can eventually lead to a lawsuit, there is also a statute of limitations on debt. In other words, creditors are not allowed to pursue legal action against debtors once the statute of limitations on debt elapses.
In Tennessee, the statute of limitations on debt is six years. Note that from the perspective of a debtor, a shorter statute of limitations is beneficial. The shorter the limit limit, the less time a creditor has to sue. Therefore, the statute of limitations on debt in Tennessee is more favorable toward creditors, while the statutes in other states favor debtors by comparison.
Not All Debts Have the Same Statutes of Limitations
Different kinds of debts may be subject to different statutes of limitations. The six-year statute in Tennessee applies to most types of consumer debt – including credit card debt. However, mortgage debt is generally subject to different rules – and longer statutes of limitations. For example, the statute of limitations on mortgage debt in Tennessee is 10 years. This means that mortgage lenders have a decade to pursue outstanding debt on a home.
Residents may accumulate various types of debt, and it makes sense to speak with a lawyer to determine the statute of limitations for the specific type of debt in question. Residents may wish to discuss their circumstances in more detail at King Law Offices. Outstanding taxes represent another form of debt, and this liability follows a completely different set of rules compared to consumer debt. Unpaid taxes are arguably more urgent compared to consumer debt like credit card bills. This is because technically speaking, failing to pay taxes is a crime. As a result, those with outstanding tax bills could face various penalties after missing payments with relatively short deadlines. Incarceration is also a possibility for serious tax crimes.
When Does the “Time Limit” Begin for Debts?
The statute of limitations on debt generally begins on the date of the last payment. This is an important concept to understand, as many debtors assume that the time limit begins when they initially accumulate their debt. Even though the statute might outline a six-year limit, debtors could face collections, four, five, or even ten years after they initially fell into debt.
For example, a resident might accumulate $10,000 of credit card debt. Over the next 5.5 years, they may attempt to pay off the debt with little success. At this point, they may contact a debt law attorney for assistance – assuming that the statute of limitations will expire within six months. However, each repayment toward this debt “resets” the time limit – and this individual would likely have to wait another three years before the statute expires. Residents who wish to use the statute of limitations to their advantage should avoid making any payments during the three-year period.
Can You Really Rely on the Statute of Limitations to Avoid Debt?
Although the statute of limitations on debt can protect consumers overwhelmed by financial issues, it may not be a reliable strategy. In an ideal world, creditors would not make any effort to recover a debt for three years – and debtors would simply use the statute to wipe their slates clean. However, major companies often attempt legal action to recover debts within that three-year period – especially for higher sums. Alternative strategies like debt settlements and bankruptcy may make more sense, and residents may wish to discuss these strategies with experienced lawyers.
That said, a keen understanding of the statute of limitations on debt can be a real asset for debtors. Once a person knows that the statute has expired, they can avoid falling into traps set by credit collection agencies. For example, agencies try to convince people to make payments toward old, “time-barred” debts. These new payments can “revive” the old debt and reset the statute of limitations. Those who suspect credit collection agencies might be employing these strategies should contact an attorney before making any payments.
Learn More About Debt Resolution With King Law Offices
While the statute of limitations on debt represents a potential route toward financial relief, there are many other potential strategies worth considering. For some, it may make sense to simply wait until this legal time limit elapses. For others, it may be more appropriate to consider a debt settlement agreement or even bankruptcy. Each individual approaches these financial challenges with unique priorities, circumstances, and goals. As a result, online research may not provide the same degree of personalized guidance as an experienced debt law attorney in Tennessee. A consultation with an established firm like King Law Offices may allow parties to discuss new ideas and strategies – including those that involve the statute of limitations on debt. Consider dialing (888) 748-KING to continue this discussion by phone – or have an in-person conversation at our various offices. Tennessee residents can visit our offices in Johnson City.