Should I File for Bankruptcy If I Have Time-Barred Debt?

Have you been receiving calls from debt collectors about debt you incurred many years ago? If so, you may be wondering if you should consider filing for bankruptcy in order to have credit card debt, medical debt, or another type of consumer debt discharged. Bankruptcy can be an extremely helpful tool for debtors in South Florida who are struggling to repay what they owe. However, there are certain cases in which a debtor might not actually be facing legal consequences for an old debt. In short, after a certain amount of time, certain debts become what are known as time-barred debts, and creditors and debt collectors cannot take legal action against the debtor in order to recover. Generally speaking, if the majority of your debt is time-barred debt, bankruptcy likely is not the right option for you. At the same time, you should talk to one of our West Palm Beach bankruptcy lawyers about the details of your debt to ensure that it is actually time-barred debt, and to make sure that you have not taken any actions that could have revived the debt.

Understanding Time-Barred Debt and the Statute of Limitations

 If a consumer has a significant amount of debt, but that debt is time-barred, this means that the statute of limitations has run out and a creditor or debt collector cannot take legal action to collect the debt. While the debt may still appear on the consumer’s credit report, the consumer cannot be sued in order for the debt to be collected, the consumer’s wages and tax refunds cannot be garnished, and no other legal actions can be taken against the consumer. Thus while the consumer still technically owes the debt, there is no legal option for the debt to be collected by the creditor or a debt collector.

The statute of limitations on most debts in Florida, under the Florida Statutes, is five years. After that time, for most debts like credit card debt, a creditor or debt collector cannot file a civil lawsuit or take any other related actions against you to recover the debt.

Reviving Time-Barred Debt

 With time-barred debt, there is not usually a reason to seek to have this debt discharged if it is your primary source of debt. However, as we mentioned, you will want to be certain that the debt is in fact time-barred debt. Certain actions might mean that the “clock” on the statute of limitations is still running (such as payments you made), or you might have done something that revived the time-barred debt. When time-barred debt is revived, the clock on the statute of limitations restarts.

How can time-barred debt be revived? In some places, merely agreeing verbally to make a payment can revive the debt. Under Florida law, “an acknowledgement of, or promise to pay, a debt barred by a statute of limitations must be in writing and signed by the person sought to be charged.”

Contact Our West Palm Beach Bankruptcy Attorneys Today 

If you have any questions about consumer bankruptcy, an experienced West Palm Beach bankruptcy lawyer at Kelley, Fulton, Kaplan & Eller can talk with you today about your circumstances. When bankruptcy is an option for you, we can work with you from the start to ensure that you meet all requirements and receive a discharge in a timely manner.

Sources:

law.cornell.edu/uscode/text/11

leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0000-0099/0095/Sections/0095.11.html

leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0000-0099/0095/Sections/0095.04.html