While technically you can be sued for a debt even though the statute of limitation has expired, the collection agency will not be able to win the lawsuit in case you can provide proof that the statute of limitation has expired on your debt. This means that once the statute of limitation is over the collection agency cannot take a judgment to take action and force you to pay such as get your wages garnished. The time for the statute of limitation a set according to the state laws and is typically between 3 to 6 years but can be as high as 15 years. The statute of limitations longest for the documents that have been notarized and the shortest for actions on open or revolving accounts such as credit card debts.
The period for the statute of limitation is measured from the date that the last activity occurred on the account. There are certain actions that can reset the clock on the statute of limitations such as promising to a creditor of the collection agency, making a payment on the account, using the account and reaching an agreement to pay the account with the collection agency.
The statute of limitations is suspended if the consumer leaves the state or is sent for imprisonment.
While the statute of limitation prevents the collection agency of the creditor to take a judgment against the consumer in a court of law it does not prevent either of them to continue to make collection efforts to recover the debt. It simply prevents them from taking any legal action such as filing a lawsuit or garnish your wages.
It is commonly believed that once the statute of limitation is over you probably don’t want to settle a debt. If you do choose to settle a debt beyond the statute of limitation the collection agency and the creditor is more likely to agree to delete the account completely from your credit report because it knows that it cannot sue you for the debt.
It is probably true that most of the times collection agencies do not sue their consumers for recovery. They might however sue in cases when they feel that the consumer has the ability to pay but is not willing to.
A collection agency or a creditor can check the payment ability of a consumer by reviewing his finances, employment record and having a look at the credit file of the person.
Consumers are forewarned is that they should not agree with the collector even on the phone or send even a dollar because the statute of limitations will start all over again.