I defaulted on a loan 9 1/2 years ago, can the bank still take me to court now?

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I defaulted on a loan 9 1/2 years ago, can the bank still take me to court now?

Auto loan; I have had no contact with the bank until I got a summons for court the other day.

Asked on October 11, 2010 under Bankruptcy Law, Tennessee

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

The statute of limitations for this kind of debt is 6 years. That means that your creditor would have had to have filed this suit 3 1/2 years ago or earlier.  Since the statute of limitations (the period in which a lawsuit can be filed) has run out, you have a defense in court.  Many times collectors will wrongfully sue but if it is not challenged in court a default judgement can still granted.  So make sure to show up and present your case.  The suit should be thrown out.  While technically, you still owe the money, as a practical matter there is no real way for your creditor to collect.

Here are 2 links that will explain other defenses that can also be used:   It is for NY courts but the general information is applicable most everywhere:  http://www.nedap.org/hotline/defenses.html ; http://www.nedap.org/hotline/clbasics.html.  

Note:  Certain actions can restart the debt statute of limitations on a dormant account, including: acknowledging that you owe the debt making a payment or partial payment making an agreement to pay/entering a payment plan making a charge on the account If the clock on the statute of limitations restarts, it starts back at zero. This gives the creditor or collector more time to use the court to force you to pay the debt.  However, the law relating to this varies from state-to-state.  You should place a call into a local attorney or your state's attorney general's  office or department of consumer protection for further information.

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

The statute of limitations for this kind of debt is 6 years. That means that your creditor would have had to have filed this suit 3 1/2 years ago or earlier.  Since the statute of limitations (the period in which a lawsuit can be filed) has run out, you have a defense in court.  Many times collectors will wrongfully sue but if it is not challenged in court a default judgement can still granted.  So make sure to show up and present your case.  The suit should be thrown out.  While technically, you still owe the money, as a practical matter there is no real way for your creditor to collect.

Here are 2 links that will explain other defenses that can also be used:   It is for NY courts but the general information is applicable most everywhere:  http://www.nedap.org/hotline/defenses.html ; http://www.nedap.org/hotline/clbasics.html.  

Note:  Certain actions can restart the debt statute of limitations on a dormant account, including: acknowledging that you owe the debt making a payment or partial payment making an agreement to pay/entering a payment plan making a charge on the account If the clock on the statute of limitations restarts, it starts back at zero. This gives the creditor or collector more time to use the court to force you to pay the debt.  However, the law relating to this varies from state-to-state.  You should place a call into a local attorney or your state's attorney general's  office or department of consumer protection for further information.


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