Can a Creditor Garnish My Wages After Seven Years?

Generally speaking, your debt doesn’t ‘expire’ or disappear until it’s paid. However, in many states, there is a time limit on how long creditors and debt collectors can utilize legal action to collect a debt. This is where working with credit repair attorneys can help.

Credit companies do more than fix credit, they can help you navigate the murky waters of debt collections and wage garnishment. Because wage garnishment and statute of limitations can vary from state to state (depending on the type of loan), working with a professional who understands these systems and laws can offer guidance.

For example, in Pennsylvania, the statute of limitations is just four years after the first missed payment, but that doesn’t mean debt collectors have to stop seeking repayment at that point. It just means they can’t sue for payment.

Wage garnishment is only possible if a debt collector or creditor has successfully sued you for payments owed. They cannot pursue legal action (suing you) after the statute of limitations has expired. This time frame varies state by state and depends on the type of debt.

What Is the Statute of Limitations?

A statute of limitations is a period of limitation for bringing certain kinds of legal action. What that means is, this statute tells debt collectors and creditors they have a certain amount of time to pursue legal action to receive payment. Once that window of time closes, they cannot pursue legal action.

Most states or jurisdictions have statutes of limitations between three and six years for most debts. Some loans, such as federal student loans, do not have a statute of limitations. To know what the statute of limitations is for your state, you need to factor in:

  • The type of debt
  • The state where you currently live
  • The state law named in your credit agreement

If you’ve verified that the statute of limitations has expired on your debt and a debt collector is suing you, you may have a defense to the lawsuit. The Fair Debt Collection Practices Act (FDCPA) prohibits suing or threatening to sue for a time-barred debt, which could mean you have a claim against the collections agency. Consult with a legal professional for more details or before you take any legal recourse.

Can Debt Collectors Collect Debts Or Pursue Legal Action After the Statute of Limitations Expires?

While you cannot be sued for payments owed after the statute of limitations expires, most states will allow debt collectors to attempt to collect payments. They may try tactics such as sending you letters or calling you, but there are still laws that protect you. How they contact you does matter, so be sure to look into the FDCPA guidelines and laws about this.

They cannot actually sue or threaten to sue you if the statute of limitations has passed, however, a court may still awad a judgment against you if you don’t show up to your court date. After all, if you don’t advocate that the debt collectors are unlawfully suing you, the court has no defense to consider. 

All in all, it’s your responsibility as the person being sued to prove that the statute of limitations has expired.

What Can Restart the Statute of Limitations?

Be aware that the moment there is activity on your account, the statute of limitations restarts. Debt collectors may try to work around the statute of limitations by convincing you to make a payment (even one dollar makes a difference) on a time-barred debt. Once there is activity (i.e., payment) on the account, the clock essentially resets and makes the debt current again.

Debt collectors cannot threaten to sue you in order to make that payment, as that is a direct violation of the FDCPA 15 U.S.C. 1692e(5).

In Conclusion

Debt collectors can be very intimidating, and if you don’t know your rights or struggle with financial literacy, going in alone can be stressful and overwhelming. At The Phenix Group, our team is full of experts in both the legal and financial aspects of credit, and we can help you navigate everything from debt collections to learning if leasing a car builds credit.

Ready to get started? Contact us today to get your future back on track!