Things To Know About Your Old Debts
As we incur debt during life, we build a credit history. This is evident by the way our credit reports get longer every few years. As we get older, so do our debts. While a creditor or debt collector cannot collect a debt “forever,” old debts can still be troublesome and annoying. Debt collectors for old debts may regularly harass you with unwanted phone calls and letters. They may even sue you.
You may be familiar with the term “statute of limitations” – a statute or law that determines the length of time that a party, like a creditor or debt collector, can sue you. On its face, it is a simple concept. Once the time passes as stated in the statute, you can no longer be sued. After the statute of limitations runs out, your unpaid debt is “time-barred.”
If you are sued for a time-barred debt, the expiration of the statute of limitations is a defense to the lawsuit. Statutes of limitations are creatures of state law, which means that they vary by state. For example, Utah’s statute of limitations for a written contract is six (6) years while Wyoming’s statute of limitations is ten (10) years.
One important thing to keep in mind with the statute of limitations is that, in most states, its effect is that a party with an alleged claim can no longer use the legal system to sue you. Your obligation to pay the debt still exists. This may explain why a debt collector may still try to collect the debt by mail or phone.
Three states – Mississippi, Wisconsin, and North Carolina extinguish the obligation to pay the debt. A debt collector has no justifiable reason to contact you in these states once the statute of limitations runs since the obligation to pay the debt, a time-barred debt, no longer exists.
The length of a statute of limitations depends on the type of debt – written contract, oral contract, or open account. This is true in most states, including Utah.
The statute of limitations in Utah for any signed written contract is six (6) years. For unwritten or oral contracts, the statute of limitation for an unpaid debt expires or runs after four (4) years. Unpaid debt from open accounts for goods, wares, merchandise, services rendered, or charges on a store account has a statute of limitation of 4 years, after which debt collectors can no longer utilize the legal system to recover the debt.
Debts originating from single, isolated transactions will generally be subject to the six-year statute of limitations for debts based on written agreements. Debts for credit cards and retail charge accounts may fall under the four-year period for open accounts but may also fall under the six-year statute for written contracts. It depends on the written agreement for the purchase and the state law governing the transaction. This law may originate from a state other than Utah. You may need to consult with an attorney to determine the answers to some or all of these questions.
Another important point to remember about the statute of limitations is that under Utah law acknowledging in writing that you owe the debt resets the statute of limitations and the debt collector can file a lawsuit to collect the debt. Why? If you make this acknowledgment, your debt is no longer time-barred!
The Morrison Law Group has remained open throughout the pandemic to serve the residents of the state of Utah. We have maintained our professional commitment to past, present, and future clients. In the summer of 2021, bankruptcy remains a sensible and effective option for any Utah resident to obtain a financial fresh start. To discuss and determine your options for filing bankruptcy, contact the experienced attorneys at the Morrison Law Group. Call 801.456.9933 today to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, Orem, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.