Agreement to Pay a Time-Barred Debt: Is it a Good Idea?
Dealing with an old debt that has been time-barred can be a daunting task for many individuals. When a debt becomes time-barred, the creditor cannot pursue legal action against the debtor to collect the debt. However, this does not mean that the debt disappears. The creditor can still make attempts to collect the debt through other means.
One of the means through which the creditor can recover the debt is by asking the debtor to sign an agreement to pay the time-barred debt. But what does it mean to agree to pay a time-barred debt? And is this a good idea for the debtor?
Signing an agreement to pay a time-barred debt means that the debtor is acknowledging the debt and agreeing to pay it, even though the debt is legally unenforceable. This agreement can be verbal or written, although it is advisable to have it in writing for legal purposes.
Agreeing to pay a time-barred debt can have both advantages and disadvantages for the debtor. On the one hand, it can be a way to resolve the debt and avoid any future attempts by the creditor to collect it. Additionally, making payments towards a time-barred debt can also improve the debtor`s credit score, which may have been negatively affected by the debt.
On the other hand, agreeing to pay a time-barred debt can have some downsides. For example, if the debtor makes a payment towards the debt, this could restart the clock on the statute of limitations, which means that the creditor can now legally pursue the debt. Additionally, the debtor may be waiving their right to use the statute of limitations as a defense against the debt in the future.
Before agreeing to pay a time-barred debt, it is important to consider the following factors:
– The age of the debt: If the debt is several years old, it may be past the statute of limitations, meaning that the creditor cannot legally pursue the debt. In this case, agreeing to pay the debt may not be beneficial.
– The amount owed: If the debt is relatively small, it may not be worth the debtor`s time and effort to negotiate a payment plan.
– The creditor`s willingness to negotiate: If the creditor is unwilling to negotiate a payment plan, agreeing to pay the debt may not be possible.
– The debtor`s financial situation: If the debtor is struggling financially, making payments towards a time-barred debt may not be feasible.
In conclusion, agreeing to pay a time-barred debt can have both advantages and disadvantages for the debtor. Before making any decisions, it is important to carefully consider the age of the debt, the amount owed, the creditor`s willingness to negotiate, and the debtor`s financial situation. If in doubt, it is advisable to seek the advice of a financial or legal professional.