For anyone who is currently facing creditor harassment, phone calls, or lawsuits, this is important information to have. You are not liable for every debt that you owe. Every state has its own rules on how long a debt is collectible. In Indiana, a debt is collectible for 10 years. That means after 10 years, the debt has expired, the owner of the debt cannot file a lawsuit, and they have no legal means to coerce the repayment of the debt. So, now what do they do?
If the debt is uncollectible, they can make an attempt to recollect the debt. If you make even one payment of $1 dollar, the debt is rehabilitated, and it will take another 10 years for the debt to expire. It is not illegal to attempt to rehabilitate debts in this manner. So, before you repay a debt in Indiana, you should ensure that the debt is still collectible. Otherwise, you are just adding more debt to your budget.
Understanding Zombie Debt
Zombie debt is the colloquial term for expired debt. Companies that do not move quickly enough to file lawsuits against debtors have the option of selling the debt to a debt collection agency. Often, these agencies pay pennies on the dollar for the debts. In some cases, this debt will be expired. The debt collectors know that if they can get you to make a small payment on the debt, they can rehabilitate the debt and then use the courts to force you to repay it.
While the debt collector may play upon your guilt, there is no world in which making a payment on this debt will benefit you, even in a small way. It will hurt you, and thus, you should not make a payment. Had the creditor moved quicker to recover the debt, they would not be in a position where they’re selling it for pennies on the dollar. Plus, in most cases, debts last six or seven years. Indiana gives creditors 10 years to recover a debt. So, if they have not made a move in 10 years, then it is their loss.
Protecting Yourself From Zombie Debt
You have a right to know who is attempting to collect a debt from you. You should recover that information from the debt collector if they manage to get through to you. Make sure that the debt is valid, and then make sure that the debt is not expired. If the debt is expired or set to expire soon, do not make a payment. If the debt is expired, the creditor has no recourse to sue or use the courts to enforce the debt. If the debt is soon to expire, the creditor has a short window of action. Force them to use it. If they do end up filing a lawsuit against you, you can then decide the best course of action be it paying the debt or filing for bankruptcy.
Talk to an Indiana Bankruptcy Attorney
Chris Arrington helps Indiana residents file bankruptcies. Call today, and we can begin discussing your options immediately.