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Statute of limitations applied to student loan debt

If you watch any of the many crime dramas now available on television, you probably have heard the term statute of limitations used. What many in Arkansas may not know is that such statutes don't represent the window within which prosecutors can pursue a criminal case alone. A statute of limitations can also apply in civil matters, too.

This is important information to know if you are considering taking out a private student loan or have one already. As myriad headlines have noted in recent years, student loans have a way of becoming significant debt burdens to their holders. Debt relief may be possible, including filing for bankruptcy, under certain conditions. Understanding how the statute of limitations applies to student loans may help individuals avoid trouble down the road.

In the context of private student loans, the statute of limitations is the time within which a creditor can sue a consumer for repayment. The size of the window depends on the laws of a given state. Some set it at three years. Others leave it open for 10. What can make statutes of limitations more confusing is that even after they close they might be reopened by a consumer's actions. It's also important to note that the expiration of limits doesn't mean debt goes away, only the creditor's right to sue does. In addition, in some cases limits may be waived or extended if the borrower agrees verbally or in writing that the debt is valid.

Then there's this scenario. Say you are a borrower who stops paying your student loan for some reason. The clock begins on the statute of limitations on creditor suits at that point. However, if you then make a payment on the loan before the statute of limitations expires, the law may allow a resetting of the clock from the date of the newest payment.

This information is not meant to suggest that a student loan borrower should ignore repayment obligations. The take away from this post is that there may be provisions in law offering debtors protections, and consulting an experienced attorney is the way to discover how to use them.

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