The Frugal Creditnista

Statute of Limitations – Tolling the Debt

statute of limitations

One of the questions I get asked a lot is:

If I move, which state's statute of limitations apply?

In actuality, it depends. As I mentioned in an earlier tip on the statute of limitations; a creditor will apply whatever statute benefits them the most. Some states make this easier for them.

For example, let's say you have a credit card debt that you became late on in 2012 while living in Florida and never made a payment on again. The statue of limitations in FL is 4 years (5 if creditor has documentation of written contract). If you later move to TN, which has a 6 year statute of limitation, the statute of limitation tolls or suspended. You won't be collected on forever, as TN's statute of limitations will take precedence – meaning they won't be able to collect past the 6yrs. IF you move back to FL, the statute of limitations could ‘awaken' again and they could try to collect on your debt all over again using the ‘tolling of the debt' defense. Could they win? Probably not, if the time limit for TN has expired and their contractual limit has expired, it will be a hard case to win; but try they will BECAUSE…. FL time frame has not expired. They still have 2 years to go because you left prior to the full 4-5 year time frame of FL statute of limitations. Confusing, right?

The American Law, LOL

Basically the statute of limitations only applies when disputing a debt using this defense, or if you are being sued to enforce a debt and you raise the statute of limitations as your defense.

Hope this was helpful!

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