New York's Statute of Limitations Rules Can Protect Consumers From Creditors
A state's statue of limitations is a hard limit on the length of time a person has to bring a lawsuit against another party. Each state has its own statue of limitations, which often varies based on what type of lawsuit is sought. When a creditor seeks to bring a lawsuit against a debtor normally they are limited to bringing this suit in the home state of the debtor. Normally in debt or credit based claims the statute of limitations starts to run when a consumer, for whatever reason, stops paying on the debt the creditor claims that they owe.
In New York that normally provides us with a statute of limitations of six years. However due to recent court decisions there is now a new way of calculating the statute of limitations when dealing with debt which is owned by a creditor in another state. New York's borrowing statute, CPLR 202, holds that if the creditor to whom you originally owed the debt is from out of state then the New york courts will review both state's statute of limitations and apply the shorter one.
This is signifigant as most major banks and credit card compaies are based outside of New York and many of these states have shorter statutes of limitations. For example, many banks and credit card companies, such as Bank of America, Chase, Discover, Barclays, and many more are located in Deleware to take advantage of favorable tax and legal policies. However Deleware only has a three year statute of limitations.
Many debt collectors either do not care or are unaware of this restriction and often threaten consumers with legal action long past the point when they are actually legally allowed to bring suit in New York. Threatening to take legal action you are not entitled to do so is a violation of the Fair Debt Collection Practices Act.
However there are numerous circumstances where the statute of limitations can be paused or even restarted. For example, if you make even a small payment on the debt while the statute of limitations is running it will restart the time limit. Debt collectors often use trickery, dishonesty and manipulation to try and find a way to collect on old debt and will often demand payment or try to get you to make a token payment on a claimed debt as a way of avoiding this limitation on their ability to drag you into court.
If you are being threatened with legal action by a creditor or bank who claim that you owe them a debt you should consult with an attorney to see what your legal rights and responsibilities are. You may be entitled to monetary damages if they are harrasing you with threatened legal claims they cannot actually pursue.