Debtors in Texas and throughout the country may dread the thought of being contacted by a creditor or debt collector. However, in some cases, a creditor or debt collector may be barred from taking any action to recoup an unpaid credit card or car loan balance. Generally speaking, if a debt is a decade old, an individual won’t have to pay it back. Most states impose a statute of limitations on collection activities of either four or six years.
However, the statute of limitations may restart if an individual makes a payment on an old debt. It is also possible that a debt collector may only be barred from filing a lawsuit on a debt that is older than the statute of limitations in the state. This may mean that a debtor could receive letters or phone calls from agencies trying to get as much of a past due balance as possible.
It is important to note that a debt could still appear on a credit report after the statute of limitations has expired. Those who are contacted by debt collectors should verify the debt and that it is still possible for an entity to collect on it.
Filing for Chapter 13 bankruptcy may make it easier to reduce or eliminate credit card or other debt balances. Debts are reorganized and paid according to a plan that a debtor creates. Payments are made for either three or five years based on a debtor’s income and other factors. An attorney may explain the benefits of bankruptcy including the ability to retain property during the repayment period.