Under the statute of limitations, creditors have a specific window of time to pursue the repayment of unpaid debt via litigation. The obligation to repay your debts remains, however, and the related items stay on your credit file for the standard seven years. Each state legislates its own statute of limitations. In New Mexico, the statute of limitations is either four or six years, depending on the type of debt.
There is a four-year statute of limitations for agreements you make without documentation, such as loans between friends a family members. This time limit also applies to open-ended accounts, such as credit cards and home equity lines.
New Mexico enforces a six-year statute of limitations for written contracts and promissory notes. These two items represent signed borrowing agreements. However, promissory notes also contain specific details about the payment schedule, total interest, and other repayment terms. Mortgages and student loans are the prevalent forms of promissory notes. Examples of written contracts includes loans and unpaid bills.
Statute of Limitations Reset
Creditors legally are allowed to continue to try to collect the debt even once the statute of limitations expires, and they may contact you by mail and phone to do so. You will reset the statute of limitations if you make any payments or even agree to send a payment. Admitting that the debt belongs to you will also restart the timer. Absent that, however, the creditor is not permitted to threaten a lawsuit once the statute of limitations has expired.
The statute of limitations should not be confused with credit reporting guidelines. The latter is set by the Fair Credit Reporting Act and does not change regardless of the state statute of limitations. As long as the information reported is accurate, negative information regarding your debts remains on your report for seven years. If a creditor is reporting inaccurate information, you can dispute, correct, and possibly have the entry deleted without restarting the statute of limitations.