What About That Old Debt?
The statute of limitations refers to the time limit a creditor has to enforce a debt by way of a lawsuit. A creditor may not successfully sue you beyond the time period detailed in the statue of limitations. This time period is not the same as the length of time a debt may stay on your credit report.
The statute of limitations in Colorado depends on the type of debt which is being considered. For open accounts such as credit cards, the statute of limitations is six years from the date on which it started to “run.” What? Yep, we also have to figure out when the time period starts. Colorado law says a cause of action (a claim to money) begins to accrue on the date of the “last activity” on the account. This generally means the last payment, promise to pay, or charge on the account. So there is a lot to consider.
So, that is clear right? Six years from the last time I paid!! Not so fast ! We also have to consider which states law we are dealing with. Most credit card companies locate themselves in certain states that have favorable laws regarding interest rates. Your credit card may state that the law of South Dakota, or some other bovine state, governs the agreement. I for one, am shocked that such behavior goes on!! These accommodating states sometimes have a three year statue of limitations on credit card accounts however.
Installment accounts, such as car loans, and actions for back rent on leases, also have a six year statue of limitations. Child support judgements stay enforceable forever, automatically renewing every six years. Other types of debt, may be enforceable beyond six years, when the creditor gets a judgement and then renews that judgement with the clerk of court.
In summary, old debts merit some analysis. Before bankruptcy is considered, a lawyer should consider the age of the debt and the possibility of using the statue of limitations to help the consumer. In most cases the statue of limitations will be (6) six years or three (3) years.