WHAT HAPPENS AFTER 7 YEARS OF NOT PAYING DEBT?

When Entering A Contract To Borrow Money (Or On Credit), A Specified Timeframe Is Required To Be Mentioned By Which You Must Repay Your Debts. In Case You Haven’t Paid Back The Due Amount By The Due Date, The Lender (Or “Creditor”) Would Have The Right To Pursue Your  Repayment By Way Of Asking Through Letters And, Later, Through Legal Action. The Lender Sometimes May Run Out Of Time To Get What Is Being Owed, As The Debt May Later Become Void (Statute-Barred). In The Discussion Below, We Shall Discuss How Long A Debt Collection Agency Could Pursue An Old Debt In India.

If There Is A Time Limit When Pursuing A Debt?

Every State Has Different Statute Of Limitations For The Matter Of Debt, And After The Limitation Period Has Passed, A Debt Collector Could Not Pursue You Legally For Repayment In Court. Each Debt Will Have A Time Limit. A Debt Would Become Statute-Barred After A Certain Amount Of Time Has Passed.

WHAT HAPPENS AFTER 7 YEARS OF NOT PAYING DEBT?

Statute Of Limitation For Debt Recovery In India

The Statute Of Limitations, Often Referred To As The “Limitation Period”, Could Be Described As The Time Frame Within Which One Would Have To File Any Grievances Related To A Certain Problem. The Courts Would Have To Deal With A Case When It Is Brought Up Before The Deadline Has Passed. 

However, When A Matter Is Raised After The Deadline Period Has Passed. The Court, In Such A Situation, Shall Not Be Required To Address Such Matters.

The Limitation Act Of 1963, Defines The Limitation Period For Various Events And Circumstances, Which Includes The Statute Of Limitations For Debt Collection.

Statute Of Limitations In The Case Of Debt Recovery Is Three Years From The Day Such Money Was Lent.

Thus, After Three Years Time Period Has Passed, And There Isn’t Any Dispute Over The Money During This Period, Here The Statute Of Limitation Has Passed, And The Court Could decide to Hear The Matter.

What Happens When The Debt Collector Is Pursuing Even After The Statute Of Limitations Has Passed?

  • Consumers Have Been Provided With Numerous Rights For The Matter Of Debt Collection, Especially In Case The Statute Of Limitations Has Passed. 

  • When A Debt Collector Asks You About An Old Debt, The Most Important Point To Be Kept In Mind Is To Resist Saying That You Are Responsible For Debt. The Responsibility Must Not Be Claimed Immediately For Three Main Reasons-

  • Mistakes By Debt Collectors Are Common As Old Debts Could Frequently Be Transferred From One Collection Agency To Another. 

  • The Debt Collector May Not Even Owe The Money Claimed. 

  • The Debt Might Be Related To The Property Of Such A Person Who Has A Similar Name Or Used Your Phone Number At Some Point.

  • The Statute Of Limitations Could In Some Situations Be Reset By Claiming The Debt. Thus, The Expired Debt Would Be Made Afresh Again, Which Is The Last Thing You Would Wish To Do.

  • The So-Called Debt Collector Could Be A Con Artist. Thus, You Must Make Sure That You  Don’t Actually Owe Any Debt, So As To Avoid Being A Victim of such Debt Collection Scams. 

  • Also, One Has The Right To Write A “Stop Communication” Letter To The Collection Agency, After Which The Agency Has To Stop Contacting You About Such Debt After You Delivered This Letter, And Could Contact You In Two Situations Only-

  • To Let You Know That Such Letter Has Been Received And Won’t Call You Again,

  • To Let You Know About Any Action Which Is Being Taken Place Against You, Such As A Law Suit.

Statute-Barred Debt- Meaning

  • In Case The Lender Has Not Pursued You For Any Unpaid Debts Within The Predetermined Time Period, It Is Important To Understand That Just Because The Statute Of Limitations Has Passed, The Debt Still Exists And Your Creditor Is Well Within His Or Her Rights To Pursue It As Doing So Could Affect Your Credit Score.

  • Failing To Pay Debts Back Would Leave a Mark On The Credit Reference File Which Would  Make It More Difficult To Obtain Credit At a Reasonable Rate Of Interest

Conclusion

It Could Be Inferred From The Above Discussion That Every Debt Has A Due Date, I.E. A Debt Recovery Agency Will Have A Deadline For Collecting An Old Debt. 


Lead India Could Help You If You Need Help Managing Your Debt As Their Expert Team Of Legal Professionals Could Assist You With Every Legal Matter Related To Criminal Or Civil Law. Thus, If You Wish To Talk To A Lawyer Or Seek Free Legal Advice Online, You Contact Us.

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