The Frugal Creditnista

Acknowledging A Debt WIth A Debt Collector, What Does That Mean?

It is no secret that acknowledgment of a debt restarts the Statute of Limitations (SOL), giving a creditor more time to legally pursue you (via a judgment that grants them authority to garnish your wages/levy your bank accounts, etc).

What exactly is acknowledgment? Many believe that it's verbal, and forbid you to speak to creditors on the phone. It's not verbal. There are 2 things that will restart the statute of limitations:

1. A written agreement 
2. Payment of any kind – full or partial

Creditors, especially collection agencies, will use #2 to their advantage all the time “Make a small payment and we'll keep your account open.” It does nothing but prolong the amount of time to collect on this debt.

The statute of limitations is a powerful weapon when paying off your debts. It allows you to determine who gets paid and who doesn't.

It's important to know that very few states prevent a creditor from suing you because the debt has expired past the statute of limitations; but once you use your state's SOL as a defense the case is quickly tossed out.

Hope this helps!

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