Do you keep getting calls and messages from debt collection agencies about an old debt that you thought was written off years ago? These people are called scavenger debt collectors, and are known for using illegal methods to collect time-barred debt. However, you should know that you do not have to pay debt that is considered too old by your state. This is what is called as the statute of limitations on debt.
| Oral Contract | 6 years |
| Written Contract | 6 years |
| Promissory Note | 6 years |
| Open Accounts | 6 years |
Every state has laws governing the time in which a person can file a lawsuit to collect debt. There are four types of agreements to which the statute of limitations can apply to – oral contract, written contract, promissory note, and open-ended account – and in the state of Maine, all four have the time limit of 6 years.
An oral contract is an agreement that is made verbally. No contract is written, or signed by either party when the agreement is made. These contracts are legally binding, however they are harder to prove in court since you do not have any hard evidence (papers, signatures, etc.).
A written contract is like an oral contract, except that the agreement is printed on paper that has been signed by both the lender and the borrower. These contracts are also legally binding, and are easier to enforce than oral contracts.
The third type is a promissory note. This is a written contract that includes a specific promise to pay. It has in detail the interest rate, repayment schedule, and consequences of default. A mortgage is an example of a promissory note. The fourth, and final, type of is an open-ended account. This is an account that has a varying balance, for example, a credit card.
In conclusion, once a debt passes beyond the statute of limitations for your state (in this case, 6 years in Maine) a debt collector no longer has the right to sue you for payment. You may still have a moral obligation to pay back this debt, but you cannot be sued over it. Any debt collector who tries to get you to do so is in direct violation of the Fair Debt Collection Practices Act.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
Favorite quote:
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."
Thomas Jefferson
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