Consumer Law

What Is The Statute Of Limitations For Debt Related Cases In Maryland?

Statute Of Limitations For Debt Related Cases

Statute of limitations can depend on a number of circumstances but generally in Maryland, its 3 years from the date the cause of action accrued. That’s lawyer-talk for when the claim becomes due. For instances, let’s say that you purchased a car and you have a five-year loan and you default on the loan after the second year. So, when does the statute of limitations run? Does it begin to run after the 60th payment is due or does it begin to run from the date that you made your last payment? Let’s say that you have a creditor or credit card debt and you haven’t made a payment for a year and you owe $5,000, the creditor sends you a notice that you owe $5,000 and that it will accept some type of payment plan. You send in $50 and that can be construed as an acknowledgment of the debt and start the three-year period running over again.

The limitations period is three years, but you need someone that’s knowledgeable about the rules as to when a cause of action accrues to take a look at those factors for you.

Should People File Bankruptcy In Response To a Creditor Lawsuit?

It depends on the individual circumstances with respect to each borrower or debtor. At my firm, we don’t do bankruptcy, we obviously, given the work that we do, work closely with bankruptcy attorneys. What I hear repeatedly from bankruptcy attorneys is that if you don’t have at least $20,000 in unsecured debt, you don’t want to file bankruptcy for a number of reasons. One is that the amount of debt that you have really doesn’t justify the cost in terms of filing the bankruptcy. In Maryland, I’m very close to Washington DC, and we have a lot people that are employed by the federal government. They generally don’t want to file bankruptcy because the government as an employer frowns upon that. The same thing is true with the government contractors.

If you have unsecured debt but you own a home, there may be reasons why you don’t want to file a bankruptcy. If you previously filed a bankruptcy, there may be a time bar in terms of filing another bankruptcy, so I often have folks that are in particularly dire states consult with a bankruptcy attorney about their debt. It depends on their circumstances. More often than not I find that if the primary motivation for the bankruptcy consult is a single debt that’s not overwhelming, generally the recommendation to those clients will be to deal with that single debt outside of bankruptcy. It’s dependent upon the circumstances, so it’s difficult to answer whether you should or should not. What I would say clearly is anybody that is overwhelmed with debt or has debt that they feel like they do not have an ability to repay should at least have a consult with a bankruptcy attorney or consider that as an option.

Is It Advisable Not To Make Any Payments When Contacted By Creditors Or Collectors?

It depends on the circumstances. Certainly if you contest the debt or you feel that it is not owed, you absolutely should not make a payment to appease the creditor. On the other hand, if it is a debt that you know is legitimate, you don’t question that you’re indebted, there is clearly not a question as to whether or not the debt is time-barred, barred by the statute of limitations and it’s really up to the individual debtor to decide whether or not he or she wants to work something out with the creditor.

If you’re a debtor and you have a creditor that is willing to work something out with you that you think may be advantageous, and the creditor is promising something in return for payment, you want that memorialized in a writing. You may want to seek the assistance of an attorney to contact the creditor and nail that down. As an example, if you have $2,000 credit card debt and your minimum monthly payments are more than you can handle and a creditor is willing to accept some type of minimal monthly payment and terminate the open-end credit in lieu of filing a suit, you want to make sure that you have that promise in writing before you undertake your end of it.

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