Statute of limitations — from filing date or from date of service in a debt collection case?

A natural question when you are sued by a debt collector is whether the statute of limitations is a good defense to the lawsuit.  The statute of limitations defense is when the plaintiff — here the debt collector or debt buyer — waited too long to sue you.

But when do you start to count the time for statute of limitations — from when the lawsuit was filed or when you were served?

Sometimes it can be weeks or months or even years between the time of the lawsuit being filed and you being served.

Regardless of how long it takes, you start the “clock” from when the lawsuit was filed, NOT when you were served.

Let’s look at some examples

First, you are sued on an old car loan after a repossession by Velocity Investments.  The date of your last payment was January 1, 2011.  Velocity sued you on March 1, 2015 but you were not served until June 20, 2016.

The statute of limitations (SOL) is 4 years on a typical sale of a car and that will go from the last payment date.  So 4 years means the lawsuit needs to be filed by January 2015.  Velocity waited too long to sue you — and I’ve never seen Velocity sue before the SOL expires.

Second, you allegedly default on a credit card in early 2013.  While debt collection lawyers argue it is 6 years, let’s go with 3 years as the SOL for purposes of this example.  Suit is file in May 2015 but you are not served until June 2016.  Is the suit barred by SOL or not?

No it is not because we go with the filing date, not the service date.  Imagine the filing date puts a stake in the ground or on the time line — that’s what matters.  Not when you are served.

What if you don’t have the best statute of limitations defense — is it hopeless when sued by a debt collector?

No — you still can be successful.  As a matter of fact, in the years of representing hundreds of consumers, I can only remember a few times where I was particularly interested in a statute of limitations defense.

Here’s normally the best “defense” — the debt buyer/debt collector must prove it owns the debt.

Seems simple, right?  If they bought it, then prove it.

Yeah…. they struggle with this.  Makes you wonder why, unless they didn’t truly buy the debt?

Remember you did not do business with — you did not borrow money from — Midland Funding or Portfolio Recovery, etc.  So for one of these debt buyers to sue you, they must show they actually bought the debt.  And that they still own the debt now.

They hate doing this.

So if you do or don’t have a good SOL defense, you still have options — actually five options when sued by a debt collector:

  • File bankruptcy — normally not a good idea but for a rare situation this can be helpful
  • Fight the lawsuit on your own without a lawyer — this can work if you are willing to put the time and work into it then you have a chance of winning your case
  • Settle the lawsuit without a lawyer representing you — either with a lump sum or a monthly payment plan
  • Hire a lawyer to fight the lawsuit — you pay a legal fee but you have someone who (you expect) knows what they are doing
  • Hire a lawyer to settle the lawsuit — you get help in settling and you need to compare this option to settling on your own to make sure it is a great deal for you

If you would like to discuss your options, give us a call at 205-879-2447 or you can contact us by clicking the button below:

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John Watts

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