If a creditor is contacting you about payments on a debt, then at first, you need to check whether or not the Statute of Limitations (SOL) on that debt has expired. The Statute of Limitations or SOL is the time period when a creditor or a collection agency (third party debt collector) can file a lawsuit and seek a judgment against you to recover the unpaid debt balance. For example, in New York, the SOL for filing a lawsuit on a credit card debt is 6 years starting from the date of default, which is the date of inactivity. However, the SOL on a store card in New York is only 4 years.

Even if the SOL on a debt expires, you're legally obligated to repay the debt. However, after the expiration of SOL, the creditor cannot file a lawsuit against you.

What is meant by the SOL on a judgment?

The SOL on judgment is the time period when a creditor can collect the judgment that has been granted by the court against the debtor. As a debtor, you are not obligated to pay the judgment once the SOL on the judgment expires. The SOL varies from one state to another. For example, the New York SOL on a judgment is 10 years, whereas the SOL in Alabama is 20 years. In New York, the creditor can even charge an 8% interest rate on the judgment.

How can a judgment be enforced?

A judgment is enforced by using the debtor's property to pay the unpaid balance amount. First, the creditor has to obtain a Writ of Execution. A Writ of Execution is a court order that directs the local sheriff or other official to seize your property. Seizure of property may comprise any personal property or vehicle owned by you, real property that is not secured by a mortgage, or the money in your bank account.

A judgment is usually enforced by the public sale of your property. However, in order for the property to be seized and sold, a court order is necessary. Some states exempt the debtor's home from being seized and sold.

When a creditor or a debt collector wins a judgment against you, they might be allowed to garnish your wages until the outstanding balance is paid off. Once a creditor gets an Order for Wage Garnishment, the creditor will present the order to your employer so that a certain amount of your wages every month is paid to the creditor.

The limitations on wage garnishment vary in each state. In New York, the maximum recoverable amount is 10% of the debtor's gross income or the federal maximum, whichever is less. The federal maximum amount that may be garnished from a debtor's paycheck is 25% or 100 times the federal minimum wage. The Statute of Limitations on enforcement in a credit card debt collection case is 6 years. You can avoid wage garnishment by liquidating your assets and paying back the amount you owe to your creditors.

Moreover, a judgment obtained in one state can be enforced in other states. Under Federal law, the creditor must seek a judgment against you in the state you currently live in with the intent to remain. However, even if the credit card company sues you in one state, the state court can apply the law of the state specified in the credit card agreement. Which state's SOL will be applied to the case depends on the law of the state where the case is being heard. If you want to know more about this issue, then you should consult a consumer rights attorney in your state.

Can a judgment be renewed?

After receiving a judgment, the creditor may renew it for one or more times, thus increasing the time limit to collect the judgment. However, the renewal period may differ from one state to another, depending on the law of the state where the judgment has been issued. To renew a NY SOL on a judgment, the creditor has to apply for the renewal within 1 year prior to the expiration of the judgment.