Should I Repay Time-Barred Debt?

If you owe debts from many years ago, should you be planning to pay them off even if they have become time-barred? Just because a debt is time-barred does not mean that a debt collector cannot continue to call you in an effort to get you to make payments on the debt. Consumer bankruptcy may be an option.

A recent article in U.S. News & World Report discusses old debt and the reasons that it can hurt you, even when it has become time-barred. To say more, we want to explain what it means when a debt becomes time-barred. Then we want to explain some of the reasons that you should deal with time-barred debt even if you cannot be sued.

What is Time-Barred Debt in Illinois?
Time-barred debt refers to debt for which the statute of limitations has run out and, accordingly, the creditor is no longer permitted by law to file a lawsuit against the debtor in order to be repaid. The statute of limitations varies greatly depending upon the type of civil lawsuit, and even debt collection lawsuits have varying statutes of limitations. The statute of limitations refers to the “clock” that begins ticking on the creditor’s time for filing a lawsuit against a debtor. The clock begins ticking when the “cause of action accrues.” Under Illinois law, the cause of action accrues when the debtor breaches the contract. In other words, the clock usually begins ticking when the consumer fails to make a payment according to the contract or agreement she or he has with the creditor.

When there is a written contract between the creditor and the debtor, the statute of limitations is 10 years. When there is only an unwritten contract, the statute of limitations is five years. Most types of debt for which consumers end up filing for bankruptcy—such as credit card debt or medical debt—have an unwritten contract. As such, for many of these kinds of debt, the statute of limitations is five years.

Once the clock for the statute of limitations “runs out,” a creditor cannot lawfully file a civil lawsuit against the debtor for the money owed. At that point, the debt has become a “time-barred” debt. To be clear, you cannot be sued for a time-barred debt.

Reasons to Deal with Time-Barred Debt
While you cannot be sued by a creditor or debt collector for time-barred debt, there are many reasons to deal with that time-barred debt. For example:

  • Debt collectors can continue to call you and make other forms of contact to get you to make payments on the debt;
  • Time-barred debt continue to affect your credit score and opportunities to obtain credit; and
  • You could end up reviving the old debt without realizing it and, accordingly, you could face a lawsuit.

There are many ways that a debtor can revive old debt. For instance, in some cases, simply acknowledging the debt can revive it, meaning that the statute of limitations starts over again. In other cases, making a single payment on a debt or making any kind of arrangements for making a payment on the debt can revive it. Anytime a time-barred debt gets revived, the debt collector can sue you to force you to pay what you owe.

Contact an Oak Park Bankruptcy Lawyer
Regardless of whether the debt you owe is time-barred, you should learn more about how consumer bankruptcy may be able to help you to get a fresh start. An Oak Park bankruptcy attorney can discuss your options with you. Contact the Emerson Law Firm today.



See Related Blog Posts:

CFPB Plans New Restrictions on Debt Collectors



Five Factors to Consider if You are Thinking About Bankruptcy

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