What is Open-Ended Debt?
There are several different types of debt, each with its own statute of limitations and laws that may apply to civil and even criminal proceedings. The regulations and time limitations vary from state to state and from case to case, depending on the severity of the legal issues.
Credit card debt is open-ended debt, which is a term for any sort of loan that does not have a definite end date for repayment. The borrower is allowed to draw money on the loan as many times as they so choose, up to a preapproved amount. Typically, all forms of credit fall into this category.
Another type of debt is written debt, which includes most loans, mortgages, and medical debt. Oral debts are non-written agreements, such as handshake agreements and verbal contracts. A promissory note is a type of written contract, typically agreed upon between two individuals or between an individual and an organization that is not a bank.
What is the Statute of Limitations for Credit Card Debt in Massachusetts?
Debt collectors and creditors have a limited time window to sue debtors for failing to pay their credit card bills in Massachusetts. The limited time is known as the statute of limitations. According to Massachusetts law, the statute of limitations for consumer-related debt is six years.
The six-year statute of limitations applies to credit card debts, verbal contracts, and written contracts. In most cases, if the statute of limitations runs out, a legal claim is no longer valid. However, the debt doesn’t go away, and creditors can still attempt to collect unpaid debts. Once the statute of limitations has expired, creditors and lenders cannot successfully sue to collect debts.
There are important exceptions to the rule worth remembering, however. If the debt collector or creditor successfully obtains a legal judgment against the borrower, the statute of limitations may be extended to 20 years. During the extended 20-year statute of limitations, interest on the unpaid debt is accrued at rates equal to 12% of the statutory maximum allowed.
When Does the Statute of Limitations Clock Start Ticking?
The clock for the statute of limitations begins when you make your last payment and continues until the applicable point in your state. In Massachusetts, this means that the six-year statute of limitations starts ticking once you make your last payment.
Before the statute of limitations expires, a debt collector has the right to file a lawsuit against the debtor if they refuse to pay back debts after repeated attempts at debt collection. If you receive a complaint, you have 20 days to respond.
If you fail to respond, a default judgment may be entered against you, after which the debt collector may use wage garnishment or liens on property to collect what is owed.
Which State’s Laws Apply on Debt Statute of Limitations After a Move?
What happens to your credit card debt if you move out of state?
Your first step is to check the agreement signed between you and the credit card company. Many credit card agreements have a clause known as a choice of venue, which dictates which state presides over conflicts or legal matters. In most cases, credit card companies and debt collectors will want to file suit in whatever state they feel they have the most leverage or advantage. Typically, this means that collectors and credit card companies are likely to seek legal action in the state with the most extended statute of limitations.
To ensure your rights are protected, contact our law firm to discuss your case with our legal team.
Do You Still Owe Debt After the Statute of Limitations?
Just because the statute of limitations may have expired does not mean you no longer owe debt. The statute of limitations primarily dictates whether a creditor or collector can sue a debtor over unpaid debt. Once the statute of limitations has run out, the debt becomes a time-barred debt. A creditor loses a great deal of legal advantage once the debt becomes a time-barred debt, as they can no longer file a lawsuit against debtors.
While a debt collector or creditor can no longer sue you once your unpaid credit card debt becomes a time-barred debt, they can still attempt to collect on the unpaid debt. Usually, this entails continuing regular collection practices unless and until you file a cease-and-desist letter against them.
If a creditor or debt collector sues you anyway, you must still respond to the summons and make your case before the judge. Failure to appear in court could have harsh consequences, regardless of the status of the statute of limitations.
Time-barred debts can be revived or reset. Debtors who make payments on old, delinquent debts essentially reset or restart the statute of limitations. Sometimes, merely admitting that you owe a debt to a collection agency may reset the statute of limitations.
Can Credit Card Debt Collectors Contact You After the Statute of Limitations Has Expired?
Collectors still have the right to pursue payments for unpaid debts even after the statute of limitations has expired. You still owe them money; if you choose not to respond, they have the right to take legal action against you. You are likely to win your argument against the debt collectors if you appear in court to defend your case with the help of an experienced attorney. However, many choose not to appear in court, which essentially costs them victory in their case and may result in a judgment being awarded against them.
If a collector contacts you about debt after the statute of limitations, it may be worth discussing matters with them to see if there is any potential resolution to the conflict. After speaking with the credit card debt collectors, you may let them know in writing to stop contacting you. Once the collector receives your certified letter, they are usually barred from contacting you again unless they wish to tell you there will be no further contact or to let you know that they intend to take specific action.
Sending a carefully worded letter may stop further attempts to contact you, but it does not eliminate any outstanding debt period. The creditor or debt collector can still sue you to collect a debt.
Contact Our Law Firm to Schedule a Free Case Evaluation with an Experienced Attorney Today
The purpose of the statute of limitations for debt in Massachusetts is that it prevents courts from hearing cases involving old, stale, or unreliable evidence. It also encourages parties to take prompt action and further prevents unfair prejudice. While beneficial to the consumer, the statute of limitations is no get-out-of-jail-free card, and you must fully understand your legal rights and responsibilities as a debtor.
If creditors are harassing you or if someone has filed a lawsuit against you, it is essential that you seek professional legal counsel from an experienced lawyer. Our Massachusetts Law Offices have extensive experience representing clients in complex matters relating to debt collector harassment, debt negotiation, and debt relief.
To learn more about our legal services, don’t hesitate to contact our law firm to schedule a free consultation with our legal team today. You can reach us at 774-228-7338 .
