The importance of debt prescription is that creditors have the right to file a claim against debtors if their debt is unpaid. This is why debtors should be aware of when the statute of limitations begins. Until November 30th 2021, creditors were allowed to threaten to sue or pursue debt after the statute of limitations had expired. This practice is now considered illegal.
It is important to note that the statute of limitations for debts is different from the time a debt is reported on a credit report. Unpaid debts and late payments can remain on a credit report for up to 7 years, though this time period may vary in certain cases. If a debt is still showing up on a credit report after the statute of limitations has expired, the debtor should contact the credit bureau and request a correction.
When prioritizing payments, debts close to the statute of limitations or those that have already passed should be placed at the bottom of the list, even if the debtor has planned to pay them. It is also important to note that debtors can no longer be imprisoned for unpaid consumer debts. Despite this, some people are still at risk of being imprisoned due to unpaid debts.
