A lender or debt collector must bring a lawsuit to recover a debt within the legal time frame known as the statute of limitations. To prevent being sued for a debt that is no longer recoverable, it’s critical to understand how the statute of limitations differs based on the type of debt. In this post, we will discuss the statute of limitations on debt in California and what you need to know to protect yourself from debt collectors.
The Statute of Limitations on Written Contracts
In California, the statute of limitations on written contracts is four years. This means that a creditor or debt collector has four years from the date of the last payment or activity on the account to file a lawsuit to collect the debt. If they do not file a lawsuit within this time, the debt is considered time-barred and cannot be legally collected.
It’s important to note that making a payment or acknowledging the debt can restart the clock on the statute of limitations. Therefore, it’s best to avoid making any payments on an old debt or acknowledging the debt in any way, as it may give the creditor or debt collector a new window of opportunity to sue you.
The Statute of Limitations on Oral Contracts
The statute of limitations on oral contracts is two years in California. A verbal agreement between two parties that are not put in writing is called an oral contract. The two-year limit begins from the date of the last payment or activity on the account. If the creditor or debt collector does not file a lawsuit within two years, the debt is considered time-barred and cannot be legally collected.
The Statute of Limitations on Promissory Notes
The statute of limitations on promissory notes is also four years in California. A promissory note is a written agreement in which one party promises to pay another party a specific sum of money on a specific date or upon demand. The four-year limit begins from the date of the last payment or activity on the account. If the creditor or debt collector does not file a lawsuit within four years, the debt is considered time-barred and cannot be legally collected.
The Statute of Limitations on Open Accounts
Open accounts are credit accounts that do not have a specific repayment term, such as credit cards or lines of credit. The statute of limitations on open accounts in California is also four years. The four-year limit begins from the date of the last payment or activity on the account. If the creditor or debt collector does not file a lawsuit within four years, the debt is considered time-barred and cannot be legally collected.
Exceptions to the Statute of Limitations
There are some exceptions to the statute of limitations on debt in California. For example, if the creditor obtained a court judgment against you, there is no statute of limitations, and the debt can be collected indefinitely. Additionally, the statute of limitations may be extended if you leave the state, are incarcerated, or are on active military duty.
It’s important to understand these exceptions and seek legal advice if you’re unsure about your debt’s statute of limitations. A debt collector may still try to collect a time-barred debt, even though it’s not legally collectible. Still, they cannot sue you for the debt, and if they do, you have a valid defense against the lawsuit.
What to Do If a Debt Collector Contacts You
If a debt collector contacts you about a debt, you should be careful about how you respond. First, you should request written verification of the debt, which is your right under the Fair Debt Collection Practices Act. The debt collector must provide you with information about the debt, such as the amount owed, the original creditor, and the dates of the last activity on the account.
If the debt is time-barred, meaning the statute of limitations has expired, you should not make any payments or agree to make any payments, as this can restart the clock on the statute of limitations. Instead, you should inform the debt collector that the debt is time-barred and that you do not wish to be contacted again.
How to Protect Yourself from Debt Collectors
Knowing your rights under the Fair Debt Collection Practices Act is essential for defending yourself against debt collectors (FDCPA). This federal legislation forbids debt collectors from employing unfair, dishonest, or abusive methods of debt collection.
Some examples of prohibited practices under the FDCPA include:
- Calling you before 8 a.m. or after 9 p.m.
- Threatening you with violence or harm
- Using obscene or profane language
- Falsely claiming to be an attorney or law enforcement officer
- Misrepresenting the amount or nature of the debt
You may be able to sue a debt collector for damages if they violate your FDCPA rights. Keep track of all violations, including the calls or other communications’ dates and times, and make copies of all letters and other paperwork.
In addition to knowing your rights under the FDCPA, you should also be cautious about sharing personal information with debt collectors. They may try to trick you into providing sensitive information, such as your Social Security number or bank account information. Be sure to verify the identity of any debt collector who contacts you, and never give out personal information unless you’re sure it’s safe to do so.
Understanding the statute of limitations on debt in California is essential for protecting yourself from debt collectors. If a debt is time-barred, you cannot be sued for it, and you should not make any payments or acknowledge the debt in any way. If a debt collector contacts you about a debt, be sure to request written verification of the debt and know your rights under the FDCPA. With the right knowledge and precautions, you can avoid falling victim to debt collection scams and protect your wealth.