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The Statute of Limitations on Debt in New York: What You Need to Know

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statute of limitations on debt in ny

According to worldpopulationreview.com, the total household debt in New York was $203.77 billion in 2021. This is more than any other state in the country.

If you are struggling to pay your debts, you may be wondering what will happen if you don’t. The truth is, there are a number of things that could happen, including legal action being taken against you.

However, there are certain laws in place to protect you from harassment from creditors. One of these laws is the Statute of limitations. The Statute of limitations is the amount of time that a creditor has to take legal action against you for an unpaid debt. After this timeframe elapses, the creditor can no longer take legal action against you.

In some cases, debt collectors still try to collect on a debt after the Statute of limitations has expired.

This article will discuss the Statute of limitations in New York and how it can impact your case.

How long is a debt legally enforceable in New York?

The Statute of limitations for debts in New York is six years. This means that a creditor has six years to take legal action against you to collect a debt. After six years, the creditor can no longer sue you to collect the debt.

However, some debt collectors may still threaten to sue you for unpaid debts after the Statute of limitations has expired. If this happens, the Statute of limitation can serve as a defense to stop paying a time-bared debt.

You can dispute the debt and ask the collector to prove that the debt is still legally enforceable.

What you need to know about the Statute of limitations in New York

The creditor is responsible for verifying if the Statute of limitations has expired before taking legal action.

If the Statute of limitations has run out, the creditor must do these:

  • Notify you that the Statute of limitation has expired.
  • Notify you that you’re not obligated to pay the debt.
  • Provide evidence that the debt has previously been paid.
  • Let you know that if you acknowledge or promise to pay the debt(or part of it), the Statute of limitations may be restarted.

What should you do if a creditor files a lawsuit against you after the Statute of limitations expires?

There are several laws that protect consumers in New York from debt collector’s intimidation. If a creditor is suing you for an unpaid debt after the Statute of limitations has expired, you should do these:

You should file a report with the New York attorney general’s office or the Federal Trade Commission.

Generally, if a creditor files a lawsuit against you in an attempt to collect a debt, it’s advisable to file an answer to the court. By filing a response, you are telling the court that you intend to fight the case. This gives you an opportunity to raise your defenses and potentially get the lawsuit dismissed.

There are two ways you can file an answer:

File an answer in-person to the clerk’s office at the courthouse:

This is a good option if you want someone to help guide you through the process and you feel comfortable going to the courthouse.

This means you will head over to the courthouse and speak with a clerk in person. The clerk will help you file the answer based on what you tell them. After that, the clerk will send a copy of the answer to the creditor.

Most importantly, ensure the clerk wrote everything you said correctly before leaving the courthouse.

File an answer by mail:

This is the most common way to file an answer. You can find a copy of the answer form on the court’s website. Fill out the form and send it back to the court.

How soon can you be debt free?

Note that you only have a limited timeframe to file an answer once you’re served with the lawsuit. This period depends on how the plaintiff (the creditor) served you the summons.

  • If the plaintiff served you in person, you have 20 days to file an answer.
  • If the plaintiff served you in printed or electronic form (e.g., mail, publication) or gave it to someone in your home, you have 30 days to file an answer.

If you don’t file an answer, the court may rule in favor of the creditor by default. And as a result, the creditor can get a judgment against you and start garnishing your wages or freezing your bank account.

What you should not do if a creditor is suing you after the Statute of limitations expires

1. Do not ignore the lawsuit:

If you are being sued by a creditor after the Statute of limitations expires, do not ignore the lawsuit. This is often the common mistake people make, and it will only result in a judgment being entered against you. Instead, you should file an answer to the lawsuit and raise any defenses available to you.

2. Do not admit to owing the debt:

Another common mistake people make is admitting to owing the debt. Later on, this can be used against you if the case goes to trial. Instead, you should dispute the debt and raise any defenses available to you.

3. Do not agree to pay part of the debt:

If you agree to pay part of the debt, the Statute of limitations may be restarted. This could potentially lead to more legal problems down the road.

4. Do not try to negotiate a settlement with the creditor on your own:

It’s important to note that debt negotiations should always be done through an attorney. Trying to negotiate a settlement on your own could result in you making unfavorable concessions.

5. Do not delay:

Finally, do not delay in taking action if a creditor is suing you after the Statute of limitations expires. The longer you wait, the more likely you will lose and be faced with a judgment against you. Take action as soon as possible to protect your rights.

Conclusion

The Statute of limitations is an important law that can protect you from creditor harassment. If you are struggling to pay your debts, be sure to familiarize yourself with the Statute of limitations. By fighting the case, you can protect your rights and stop the creditor from harassing you.