Getting Rid of Your Debt: Why "Waiting it Out" is a Risky Strategy

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Some people choose to ignore their debts, either intentionally or simply because they don’t know what else to do. This is very risky, and foolish by many people’s standards, but we have to talk about it because it goes on all the time, whether we mean to or not. Today’s topic involves attempting to wait out a debt in hopes that the statute of limitations will pass before you get sued.

In Texas, many debts have a 4-year statute of limitations. What that means is that if a person does not pay a debt, the creditor has only 4 years from the last payment or the last promise of payment to either collect the debt or to sue the person and then get a judgment. If the creditor waits until after 4 years has passed before suing the person, the person may be able to prove that the creditor took too long to do anything about the debt and then get a ruling that the debt is unenforceable.

There are downsides to waiting for the statute of limitations to pass:

Before the statute of limitations runs, you may receive a lot of phone calls and letters demanding payment. If the creditor is not able to collect the money, the creditor may sell the debt to another, more aggressive, creditor.

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To combat the aggressive creditor, some people choose to hire an attorney to take the phone calls and collection letters and shield them from the annoying calls and mail. There are laws that require creditors to respect the attorney-client relationship. If you hire such an attorney to handle your creditors for you, the creditor may be obligated to direct their communications to that attorney. Many times, the attorney notifies the creditor that she has been retained by you, thus redirecting the calls and mail to her, and then the attorney may use delay tactics to undermine the creditor’s attempts to collect. The intent is to give you relief from the constant calls and collection letters, and hopefully the creditor will just give up and go away and let the statute of limitations expire. This strategy may deflect the harassing phone calls from you, but it may not prevent the creditors from suing you in the meantime.

The creditor may realize that the statute of limitations deadline is approaching and then hire a lawyer to sue you. If this happens, the statute of limitations stops and then you may have to go to court to defend yourself. If the creditor wins, you may be stuck with all the interest and penalties that have racked up by not paying on time. What’s more, you may now have to pay the creditor’s attorney fees and legal expenses. It’s like paying someone to sue you.

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By getting a judgment against you, an otherwise unsecured debt may suddenly become secured. With a judgment lien, the creditor may be able to collect on the debt by seizing your assets. They may freeze your bank accounts and take them, or the sheriff may come to your home and start taking things so he can sell them and use those proceeds to pay off the debt.

So, if the creditor is asleep at the wheel, you may be successful in getting your debts past the statute of limitations. But if the creditor wakes up and sees what is about to happen, you may get sued, and then the amount of debt may skyrocket.