How Long Can a Bad Debt Be Collected?


There are different views on how long an unsecured bad debt is collected. For the debtors they will relly on the statute of limitations where after seven years the creditors will not be able to pursue the debts anymore. On the creditor's side, they will still have options especially if the debts are already with collection agencies and court rulings are accepted. An unsecured bad debt may already be written off on the claimant's books but these accounts can also be turned over to collection agencies and they will do the collection efforts themselves. They will be those who will send collection notices and demand letters in order to pursue these collection efforts.

Actually an unsecured bad debt can still be collected especially if a court judgment has been made. The account can also be counted as active if payments have been made. After the last payment the debt can still be pursued and collected within a seven year period, counting from the last day of payment. Within this period the creditor will make efforts to seek for a court judgment because after seven years the statute of limitations will already set in. This is the prescription period usually set by the law and after this time they will not be able to pursue the debt. However, debtors have to check on the laws in their places because the limitation period may be different, and they have to go with this statute of limitations or prescription period.

If you have a bad debt and you are concerned about how long your creditors can keep on pursuing these debts you have to take into account this prescription period of seven years, or with how many years it will be in your place. It can be of help also if you will not sign demand letters or collection notices so that it can not be used against you. Initials can be made only if these letters are actually handed to you. However, you have to think also that creditors or their agents will do all efforts to collect from you. When these bad debts are already established as yours they can go to the courts and it can be possible that they can get a court judgment.

For your bad debts it may be more to your advantage and peace of mind if you will seek a debt settlement agreement for this. You can get a credit counselor or you can do the negotiations yourself. A credit counselor may have the better option and they can have the possibilities of obtaining negotiable agreements that will be to your advantage. Your debt capital may be lowered and may even have the potential of having the debt balance paid in monthly amortizations that can be extended to a longer term. The percentage rate of your debt may be reduced or the surcharges written off, with the negotiations made. If you have an unsecured bad debt like unpaid credit card debts, it may be better to pay this through a negotiated settlement agreement and not forgetting it completely.


Source by Jim Oneil


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