There are four categories of debt that each state decides the length it is collectable for Oral Agreements (I agree, sounds rather worthless but they carry a bigger punch than one would assume); Written Contracts (where your typical collection would be located, like a medical debt); Promissory Notes (Installment loans like your mortgage or student loan); and Open-Ended Account (Your revolving accounts like a credit card). California is 2 years for Oral and 4 years for the rest. The difference between legally owing to someone for 3 years compared to 15 years is a crazy difference.
Just remember one thing, when you hear someone boast to you of a tremendous story that they negotiated a debt for pennies on the dollar, it’s because the debt was probably outside the States collectable period and therefore paying anything was far too much. Not to mention they could be looking at that same collection for another 7 years on their credit report due to reactivity. Just because a debt is not enforceable in court doesn’t mean the collector still cannot try to fool you in paying in what they believe is still owed. I hope you enjoyed this information
Sam Cotton – NMLS #263585
Sr. Loan Officer\Since 1996
1131 Monterey St.
San Luis Obispo, Ca 93401
NMLS 218908
805 550-5000-cell
805 782-6999-office
805 782-6998-Fax
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