Summary: Are you being sued by a creditor for an old debt in Pennsylvania? Find out how to make a defense using the statute of limitations.
If a debt collector sues you over old debt, you might be wondering what actions to take next. Although it might be tempting to ignore the lawsuit, especially if the debt is time-barred, you'll still need to file an Answer.
The statute of limitations is of the best affirmative defenses you could use in such a situation. So before resorting to debt repayment plans, negotiations with the creditor, or filing for bankruptcy, it's essential to know how the statute of limitations can protect you.
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What is the statute of limitations on debt in Pennsylvania?
Pennsylvania's statute of limitations on debt is four years for unsecured loans, oral contracts, open-end accounts, revolving credit, promissory notes, and written contracts such as credit cards, medical bills, personal loans, etc.
The statute of limitations commences on the date you failed to make a payment by the due date.
For this reason, the creditor has up to four years from the date you defaulted or breached the contract to file a collection suit against you. If they fail to file a collection suit within four years, they will be barred from seeking judgment against you in court.
Pennsylvania Statute of Limitations
Deadline in Years
20 under seal (4 other)
Debt on Account
The four-year statute of limitations also applies to the following types of debts:
- Private student loans (not government-backed loans).
- Secured loans for personal property.
- Second and later mortgages that become unsecured due to a foreclosure.
As mentioned earlier, the four-year statute of limitations doesn't apply to all types of debts. Here are examples of scenarios where the four-year statute doesn't apply:
- Contracts signed under seal. If a contract or document has the word 'seal' in the signature block, then the four-year statute doesn't apply to such a document. Some common types of instruments signed under seal include mortgage loans and other promissory notes. The statute of limitations for such documents is 20 years unless some other statute sets a different time.
- Mortgage loans. The state of Pennsylvania has no legal requirement for a mortgage lender to foreclose within a stipulated period after a default. However, it's argued that mortgages signed under seal should have a 20-year statute of limitations. The only statute of limitations that applies to mortgage loans requires first mortgage lenders to seek a deficiency judgment six months after a sheriff's sale and not later than that.
- Taxes. The state of Pennsylvania has no statute of limitations on most state and local taxes. Even so, the Internal Revenue Service (IRS) is bound to a ten-year statute of limitations for collecting federal taxes in Pennsylvania. The only way you can discharge federal, state, and local income taxes is through bankruptcy.
- Civil fines. Civil fines may apply to government obligations such as criminal fines, restitution, parking tickets, etc. However, such civil fines don't fall under the four-year Pennsylvania statute of limitations.
- Federally-backed student loans. The Pennsylvania statute of limitations only applies to private student loans. There's no statute of limitations on federally-backed student loans.
- Domestic support obligations. The Pennsylvania statute of limitations doesn't apply to domestic support obligations such as child support, alimony, and maintenance.
Note that the statute of limitations only bars creditors from taking legal action against you, but it doesn't prevent them from collecting a debt using other measures. For example, creditors can still collect the debt outside of court using other means as long as they don't violate the federal Fair Debt Collection Practices Act (FDCPA).
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What can restart the statute of limitations?
The purpose of the statute of limitations is to protect you, the debtor, from being sued by the creditor for a time-barred debt. However, there are particular circumstances where you can unknowingly reset the statute of limitations, thus allowing the debt collector to file a collection suit against you.
Some of the actions that can restart the statute of limitations include:
- Acknowledging debt. Always proceed with caution when a creditor contacts you about an old debt. They may try to get you to say or write a promise to pay the debt, an action that will automatically reset the clock on old debt. For this reason, it might be advisable to avoid speaking with debt collectors about an old debt and consult an attorney or SoloSuit for assistance.
- Making a voluntary payment for any amount. Some collection agents may contact you and trick you into making a small payment as a sign of good faith. Suppose you fall for the trick and make a payment of, let's say, $10. In that case, the payment will restart the statute of limitations and give the creditor more time to collect the debt or file a collection suit against you.
- Making a charge. Making a charge to your account on an old credit card automatically resets the statute of limitations.
- Entering a payment plan. The creditor may present you with a settlement offer or promise to clear your debt if you agree to make a partial payment. However, if you agree to a payment plan, the statute restarts and applies to the full debt balance.
Note that if you reset the clock on old debt, it starts back at zero and gives the creditor more time to seek legal action against you. So, if the statute of limitations is ten years and you make a small payment to the debt account after nine years of being dormant, the statute automatically resets.
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What if a debt collector sues you after the statute of limitations has run out?
If a debt collector files a lawsuit against you, you'll need to respond to the lawsuit even if you're confident that the statute of limitations has passed. In your answer to the court, you'll need to state that the statute of limitations bars the plaintiff's complaints. Nevertheless, the statute of limitations isn't the only affirmative defense you can raise. You could raise other types of defenses, such as the debt collectors having insufficient documentation to prove that they own the debt.
If it's your first time receiving a notice of complaint and summons from the court, you may find the process of responding to a debt collection lawsuit a bit hectic. This is where SoloSuit, a step-by-step web app, comes in handy.
You can use the software to generate a legally-acceptable answer document in minutes. The only thing you need to do is accurately answer all the necessary questions. After that, you can print the Answer document and mail it to the court. Alternatively, you can have a SoloSuit attorney review the document and file it on your behalf for a small fee.
What is SoloSuit?
SoloSuit makes it easy to respond to a debt collection lawsuit.
How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.
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