Answers to Common Questions
One of the main terms that a person seeking credit repair solutions will hear time and time again is the "statute of limitation." This simply refers to the maximum amount of time that a debt collector has to sue you in order to collect whatever amount is owed. After this time period, or statute of limitation, expires, the collector has no more legal right to the money. All they can do is ask for it, but you have no legal obligation to pay. Many debtors choose to settle on a payoff option with the collector. If this type of negotiation can't be reached, then the other option is to mail a cease communication letter, and wait for the record of this debt to fall off your record.
Gaining an understanding of this statute of limitation and other time limits is critical in credit repair. Many people don't realize that this time limit is completely separate from the reporting period limit. In fact, the statute of limitation is generally a shorter span of time. These are specific for each type of date as well as the state it is owed in, so consulting with a credit repair service can help you figure out what sort of time frame you are working with. These generally begin with the date of the original default, or the first time you did not make a payment.
Not understanding your rights and how statutes of limitation work can give the collectors a big leg up against you, because they still have the right to ask you for the money that you are no longer legally obliged to pay. It is critical to understand your rights in this case, and go over your agreement in detail with a qualified professional if interested in credit repair. A collector may still try to sue you after this date, but if you turn up in court brandishing your statute of limitations argument, the case will be dismissed.
An important aspect to take note of that many people have confusion about relates to the exact date that the clock is set for the statute of limitations. As stated above, this is completely different from the reporting period in which the debt can show up on your credit report. The date that you first failed to make a payment, or defaulted, is the date that sets the statute of limitation. If you enter into a payment plan with a collector, the clock will then be reset. However, if the debt is transferred from one collecting agency to another, the clock does not start over. All of this is critical to understand when learning about credit repair, because it has such a big impact on your legal rights and payment options.