Does Disputing a Debt Restart the Statute of Limitations?

When you have debt, creditors can sue you to make you repay them. Like many causes of legal action, there is a statute of limitations on debts, and creditors only have so much time to file a case against you.

The deadline on your debts will depend on what state you live in. Some states might have longer statutes of limitation than others, and it is imperative that you find an attorney in your state who can help. If you want to dispute a debt with a creditor, be careful. Doing so could reset the clock on your debt, allowing the creditor more time to file a case against you. Speak with your lawyer; they can help you navigate the dispute process without restarting the clock. In some cases, it might be better to wait out the clock than initiate a dispute. If the deadline expires, creditors can no longer come after you for payment, and whatever dispute you might have had could be moot.

If you have debts you wish to dispute, call our Pennsylvania bankruptcy lawyers for assistance at (215) 701-6519, and our legal team at Young, Marr, Mallis & Associates can arrange a free initial case review.

What is the Statute of Limitation on a Debt?

Your first question is probably about the deadline on your specific debts. This is a tough question to answer, as the statute of limitation might vary based on your situation. For example, in New Jersey, the statute of limitations on debt is 6 years. However, in Pennsylvania, the statute only allows creditors 4 years to take legal action to get payment.

The deadline might also depend on the nature of the debt. Is your debt from something like unpaid credit cards, or is it related to a contract of some kind? These debts are very different, and creditors’ deadline to pursue legal action may differ. If you are facing any legal action from a creditor, talk to your lawyer about the debt in question and when the debt was incurred. There is a chance the deadline for creditors to take action is fast approaching.

What Happens to the Statute of Limitations if I Dispute a Debt?

The tricky thing about the statute of limitations on many kinds of debt is that the clock might be paused or even reversed under certain circumstances. If you attempt to contact creditors and dispute the debt, your actions could cause the clock to restart, thus allowing creditors more time to take legal action against you.

For example, if you acknowledge that the debt in question is yours and that you owe this money to the creditor, the statute of limitations might reset. Remember, when a deadline on a debt resets, it resets for the entire balance, not just the portion you want to dispute.

If you want to deny the debt outright and argue that you do not owe it or did not incur it in the first place, the clock might not restart. Even so, speaking with an attorney in your state about the situation is wise before you do anything. If you contact creditors before speaking to a lawyer, you risk restarting the deadline and allowing creditors more time to file a case against you. If they win their case, they can compel you to pay the debt or face legal consequences.

Should I Dispute a Debt or Wait Out the Statute of Limitations?

The thing about a statute of limitation is that it might work in your favor. If, for whatever reason, creditors have not taken any legal action against you by the time the statute expires, they no longer have a legal claim and cannot compel you to pay the debt. As such, you need to speak with your lawyer about the debt in question to determine how close the deadline is to passing.

You might want to dispute a debt, but after speaking to our Philadelphia bankruptcy lawyers, you might learn that the statute of limitations is very close to expiring. In that case, talk to your lawyer about the risks of simply waiting out your creditor. If the deadline expires soon, our team can help you make sure the creditor stops coming after you about repayment.

It is possible that the deadline has already expired on a debt that has recently come to your attention. Perhaps you shut off the power at your previous home or apartment only to find out the power company left it on by mistake, racking up a large, unpaid bill you did not know about. Next, suppose the power company never realized the debt was unpaid and failed to take legal action to compel payment. If the power company suddenly realizes its mistake, it might try to get you to pay even though it knows it legally cannot force you.

Talk to your lawyer about all debts you wish to dispute. You never know what you might find out.

How is the Statute of Limitations Restarted for a Debt?

There are various ways that you might accidentally restart the statute of limitations on a debt when you try to dispute it. For example, if you want to dispute the debt but make a payment on it – perhaps as a show of good faith to the creditor – the statute will reset back to the beginning. If you do not believe you should be paying the debt, do not make any new payments until you speak with a lawyer.

Working out a payment plan, accepting a settlement, or agreeing to pay any portion of the debt might restart the statute. Again, speak to a lawyer about any debts you want to dispute before considering repayment.

Even acknowledging that the debt belongs to you might be enough to reset the clock.

Finally, avoid adding new charges to the debt. For example, if the debt is in relation to unpaid credit cards, do not use those cards under any circumstances until you have spoken to a lawyer. Adding new charges and increasing the balance might restart the statute of limitations.

Contact Our Bankruptcy Attorneys to Talk About Your Debts and How to Handle Them

If you have debts you wish to dispute, call our Delaware County bankruptcy lawyers for assistance at (215) 701-6519, and our legal team at Young, Marr, Mallis & Associates can arrange a free initial case review.