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The code that covers Texas civil practices and remedies lays down the statute of limitations on the breaching of a contract for a debt. This applies for four years when it is served either in writing or verbally.

What is means is that from the moment of the debtor’s last payment, a creditor has just four years in which to file a lawsuit seeking to obtain judgment on the specific debt.

Even when the debt has passed the four-year limitation, it doesn’t mean that there is no need to be concerned about it anymore. The rule has many nuances which can create issues for the debtors who carry the debt.

A Defense

First up, the statute of limitations is a defense, which means a creditor is still able to file his or her lawsuit even when the four year time period has passed. The debtor then has to plead the debt has passed the statute of limitations. Debtors who don’t answer this kind of lawsuit runs the risk of a default judgment, which can be costly to reverse.

The statute of limitations begins the moment a debt is defaulted on. A debt may well be over four years old, but if the debtor makes a payment it will reset the statute’s clock.

Debt Information and Credit Score

Debt information remains on the debtor’s credit report for as many as seven years. Even if a debt has gone past the statute of limitations, the debt will still affect the debtor’s credit score. Credit reporting agencies can list the debt for seven years resulting in a negative credit score.

The majority of creditors will tend to file their lawsuits long before the statute of limitations has run its courses, especially if the debt is a big one. Most creditors understand the statute of limitations and want to be sure they are not barred from filing because they missed the time.

Possibly the most powerful aspect of the statute of limitations is that it halts a creditor from chasing a judgment on a debt after the time limitation has ended. It means the creditor may never be able to attach a judgment to any of the debtor’s property, and he or she will not get a court to enforce it.

In addition, if a debtor files a chapter 13 bankruptcy, the statute of limitations can be used to stop the creditor from getting paid by the chapter 13 plan payments.

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