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What consumers should do when hit with time-barred debt

Even when people believe that their finances may be in order, they may be contacted by a creditor trying to collect old debt. Since debt has a statute of limitations, creditors are unable to collect unpaid debt once a certain time period has passed. These ‘expired’ expenses are known as time-barred debt. Regardless of whether the person is actually still responsible for the debt, however, aggressive creditors may continue harassing debtors through phone calls, mail and even bad marks on their credit report.

Although it may seem overwhelming, there are a few things people should keep in mind when faced with this type of situation. First, people should refrain from making an installment payment in order to appease the creditor. The statute of limitations on the debt can restart when a payment is made, unless the debtor makes the full payment in one lump sum.

Furthermore, the time-barred debt may not be valid. The creditor could be contacting the person by mistake on a debt that has already been paid. It is crucial that people research the debt, and dispute it if it has been made in error.

Once the debtor receives notice regarding the unpaid charge, he or she has 30 days to appeal the debt. During this time, people can research the charge and explore their options as to how to proceed. Depending on the situation, people could file for bankruptcy, work with a credit counselor or speak with an attorney in order to find the best route.

Source: LA Times, “How to handle debt that has ‘expired’,” Sean Pyles, Sept. 17, 2016.

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