Michigan residents could find themselves facing financial troubles. Job losses or illnesses that make someone unable to work may lead to debt accumulating. Financially struggling debtors might wonder about the statute of limitations associated with debt collections. Michigan has its particular laws and rules regarding the statute of limitations, and debtors may need to review whether their obligations are still legally valid.
The statute of limitation for debt
Not all debt is the same, and there are different statutes of limitations specified for various types of obligations. Credit card debt comes with a six-year statute of limitations, while the timeline for auto loan debt is four years. Both medical and state tax debt must adhere to a six-year limitation.
When the statute of limitations expires, the debtor can no longer sue to collect. However, the creditor may continue to bill the debtor and seek payment. Not everyone may realize that the statute of limitations passed.
Further points about the statute of limitations
Relying on the statute of limitations to pass to avoid financially straining obligations might not be a workable plan. Perhaps debtors could look into their options for filing for personal bankruptcy.
Some may make mistakes and not realize the statute of limitations did not expire, leading to a costly civil suit. In some instances, the time-barred period becomes reset based on the debtor’s actions. That means six calendar years passed, but the statute of limitations gains an extension. Making a partial payment on debt could cause this to happen.
Persons struggling with debt might explore options for Chapter 7 or Chapter 13 bankruptcy. Unsecured debt could face a discharge regardless of the statute of limitations. Creditor collection actions cease when someone files for bankruptcy, which might make life less stressful for those attempting to rebuild their financial lives.