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Debt Collection & Payday Loans
This article provides information on time limits on debt collection.
Composed by TexasLawHelp.org • Last Updated on February 22, 2023
Learn more about when a debt becomes time-barred and what your options are once that happens.
When is an old debt too old for a collector to sue?
Texas Civil Practice and Remedies Code 16.004 controls the statute of limitations on debt in Texas. Time-barred debt is old debt that a debt collector cannot sue you to collect, as it has reached the statute of limitations, but they may still attempt to collect. The statute of limitations on debt in Texas is four years. They have four years to bring a lawsuit; otherwise, the debt becomes time-barred.
When does the clock start ticking?
Usually, the clock starts ticking when you fail to make a payment.
Do I need to pay a debt that is considered time-barred?
That is up to you. While you do have options, each one has consequences. Talk to a lawyer for help strategizing.
What are my options?
Pay nothing on the debt. Although the collector may not sue you to collect the debt, you still owe it. The collector can continue to contact you to try to collect unless you send a letter to the collector demanding that communication stop. Not paying a debt may make it more challenging or expensive to get credit, insurance, or other services because not paying may lower your credit score.
Make a partial payment on the debt. In some states, if you pay any amount on a time-barred debt or even promise to pay, the debt is "revived." This means the clock resets, and a new statute of limitations period begins. It also often means the collector can sue you to collect the total amount of the debt, which may include additional interest and fees.
Pay off the debt. Even though the collector may not be able to sue you, you may decide to pay off the debt. You may be able to negotiate a settlement. Some collectors may be willing to accept less than the amount you owe to settle the debt, either in one large payment or a series of small ones.
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I've got some insights into the concepts and topics covered in that article. Debt collection, statute of limitations, and legal rights are the key areas discussed. Let's break it down:
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Debt Collection & Payday Loans: This is a broad category encompassing various aspects related to debt recovery practices and regulations governing payday loans. It touches upon rights, limitations, and strategies when dealing with debt collectors.
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Statute of Limitations: This legal concept establishes the maximum time after an event within which legal proceedings may be initiated. The article specifically refers to the Texas Civil Practice and Remedies Code 16.004, which sets the statute of limitations for debt in Texas at four years. This means that after four years, the creditor can't sue to collect the debt, although they might still try to collect.
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Debt Time-Barring: After the statute of limitations has passed, the debt becomes time-barred. This doesn’t erase the debt, but it limits the legal options for debt collection. Despite this, collectors might still attempt to recover the debt through other means, like contacting you or negotiating payment.
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Debt Payment Options: The article provides three options:
- Pay nothing: The debt exists, but legal action can't be taken. However, this might negatively impact credit scores.
- Make a partial payment: In some states, this action resets the statute of limitations, enabling collectors to sue for the total debt.
- Pay off the debt: Even if not legally required, paying it off might be an option. Negotiating a settlement for a reduced amount could be possible.
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Rights and Consequences: Understanding your rights when dealing with debt collectors is crucial. Seeking legal advice can help strategize the best approach.
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Resources and Information: The article provides additional resources and related articles for further information, such as the Debt Collection Rights Toolkit, managing credit card debt, negotiating with debt collectors, and civil lawsuit statutes of limitation in Texas.
This information is vital for individuals navigating debt collection situations, emphasizing the importance of understanding legal rights and the consequences of different actions regarding debt repayment.
