Debt Collection, Garnishment, Repossession

questions & answers

Question: Is a debt consider legally binding if it is more than 7 years old?

Answer:

The short and fast answer is no, you are probably not liable for a debt in Arizona that is over 7 years old.  However, to fully answer this question, you first need to know when the clock started ticking, then you will need to define what type of debt this is.  When those two facts are known, you can apply the proper statute and determine how old the debt really is (it may be much newer then 7 years, for accounting purposes).  Then you can determine if it is legally binding.
 
 Ways that various companies/collection agencies “start the clock”:
 
1) Date of the actual Last Payment
2) Date that the Last Payment was due, but not made
3) Date of Charge-off
 
The date the clock starts ticking is called the “Date of Default”.  When that date technically happens is usually mandated by the original contract or cardmember agreement, assuming one exists.  Generally, each of those three possible dates above happens within 6 months of the other ones. 
 
Types of Debt and the Applicable Statute:
Credit Cards – Two different rules may apply, depending on the court/judge.
-Written contracts: 6 years from the Date of Default.  A.R.S. §12-548.  Most credit cards fit into this category because the account holder agrees to the terms of the written contract by the physical act of using of the card.
-Open Accounts: 3 years from the Date of Default.  A.R.S. §12-543.  An open account is usually for a certain trade or industry, like the warehouse the plumber goes to when he buys wholesale parts.  That warehouse is not open to the public, and you must have an account to shop there..
 
Purchase for the Sale of Goods (autos, furniture, jewelry, etc.): 4 years from the Date of Default.  U.C.C. §2-725(1)
 
Personal Notes (Notes with personal guarantees, payday loans, real estate contracts): 6 years from the Date of Default for written contracts.  A.R.S. §12-548
 
Answers
Therefore, if your debt fits into any of the categories above, there is no statute in Arizona that allows a creditor to collect a debt that is as old as the one referenced. 
 
However, if this alleged debt has now become a judgment, then that judgment is good for five years from the date it was signed, and is renewable every five years indefinitely.  A.R.S. §12-1611.  You should check with the Court’s website for the county you are in or those you have lived in, and search the court records.  If there is a valid judgment against you, then you are liable assuming it was granted less than five years ago, or has been renewed.

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