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The Frugal Creditnista

Know Which Statute of Limitations Apply to Your Debts

Your statute of limitations is a powerful defense when paying off debts and improving your credit score.  There are different limitations depending on the type of debt that you have.

Example 1: In IL credit card debts are 5yrs, written contracts are 10yrs; if you are in collections for writing a bad check the SO Lis 3yrs; and if a creditor is pursuing you for something you bought from their store (furniture, appliances, etc excluding credit card transaction; it's 4 yrs.

Example 2: In NY credit card debt is generally 6yrs; for a department store credit card it's 4 years; and even shorter for credit card issuers who's contracted statute of limitations is shorter than 6 years (Discover, Chase, BofA, Wells). What the heck does that mean?

Well, in most credit card contracts, the bank will tell you who's state laws they follow, for Discover, Chase and Bank of America, their state limitations are set for 3yrs. They will pursue you past that 3 years IF your state's statute of limitations is longer than 3yrs, as in NY it's 6. In 2010 NY said Ummm NOOOOO. If your statute of limitations is 3, 4, 5, that's all you get, don't pursue our residents using our 6yrs as a basis. Good stuff right?!

The statute of limitations is REALLY important and something you should investigate immediately if the debt is older than 2years so that you don't re-age the debt by paying it.

This is my first step in my Money Boss 90-Day Success Path, inside of my online financial empowering school.  Google is your friend, but looking on your state's government websites is also key; I wouldn't know any of the above had I not looked on the state's website and in some cases called the Attorney General's office directly!

This is your credit, your finances, and your future; BE PROACTIVE AND ASSERTIVE in going from Financially Sad to Financially Fab.

This is the site >>ConsumerFinance.Gov<<< I use to look up both the agreement and the state's statute of limitations; both are good for 2 reasons – 1 you want to know what state's statute of limitations apply; 2 you want to know what fees you agreed to be added to the original balance if the account is now with a collection agency.

Hope this helps!

P.S. Keep in mind that a creditor will always try to go with the statute of limitations that benefits them the most. If their contracted state is longer, they'll go with that, if the state you charged the account in is longer they'll go with that one, if you moved and your new state's laws are longer, they'll go with that one. It is YOUR job to pull their card on it; their main objective is to get in your pockets.

Hope this helps!

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