What happens if I enter into a payment plan with a collection agencybut in 4 months the SOL will expire?

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What happens if I enter into a payment plan with a collection agencybut in 4 months the SOL will expire?

Asked on June 17, 2011 under Bankruptcy Law, Colorado

Answers:

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

Answered 10 years ago | Contributor

The statute of limitations (SOL) is the time period in which you can be sued for a debt. Once the SOL runs out a creditor can no longer go to court and obtain a judgment against you. Therefore it can't lien your property, garnish your wages, or the like (although it may still try to bring suit; if it does you must go to court and let the judge know that the SOL has run).

However the SOL can be re-started. The general rule is that the SOL starts from the "date of last activity" on the account (if it is still listed on your credit report the date of last activity should be noted there). Yet in some jurisdictions, making a payment on an old debt, agreeing to an extended repayment plan, or merely acknowledging that the debt is yours can extend the SOL. Therefore, for example, if you start a repayment plan 3 years after the date of the last account activity and the SOL in your state is 6 years, the SOL will then be extended for 6 additional years starting from the date of the last payment (i.e. repayment).

Also, even if the SOL has run, you still owe the debt. Granted the creditor really can't do much to collect but it still can still try by sending letters and making phone calls.

At this point, you should check directly with an attorney in your area as to specific state law.


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