Trusts have several advantages that make them popular choices in estate planning. But before creating and funding a trust, it’s important to understand the disadvantages of making a fully informed decision for your estate.

What Does “Statute of Limitations” Mean?

A statute of limitations is a legal term that specifies the maximum amount of time a person or organization has to begin legal proceedings based on the date of the original offense. For example, if someone caused a car accident that injured another driver, the injured driver will have a limited time to file a personal injury claim. Once that time has passed, it’s tough to convince a court that the injured party should still have a right to sue. Statute of limitations can vary from state to state and with different categories of offenses.

What Is Illinois’ Statute of Limitations on Debt Collection?

Illinois recognizes two types of debt and has different statutes of limitations for each.

Unwritten/Open-Ended Agreements. An unwritten debt is one for which there were only oral agreements, such as between friends or family members. An open-ended agreement, such as credit cards, does not have a specific end date. Illinois has a five-year statute of limitations for collecting these types of debts.

Written Agreements/Promissory Notes. When written agreements or promissory notes have specific end dates, such as student loans or mortgages, the statute of limitations for collections is ten years in Illinois.

When Does Illinois’ Statute of Limitations on Debt Collection Begin?

The statute of limitations begins as soon as the debtor first defaults on the loan (usually 30 days from the date of the last payment, when the first missed payment happens). It does not start when the loan agreement is confirmed. So if it’s been more than five years since someone applied and was accepted for a credit card but defaulted for the first time a year ago, the statute of limitations still has four years.

If the debt someone’s trying to collect is older than the statute of limitations allows, do not pay anything on that debt or talk to collectors about it. If you pay the debt, legally, that is seen as acknowledging it—and acknowledging it can restart the statute of limitations timing.

When Should I Hire an Attorney?

Ideally, as soon as someone becomes aware that they have a debt problem (they’ve gotten a call from their lender or a credit collection agency), bringing in an attorney could help the process go more smoothly from the beginning if debt collectors are harassing someone, especially if it involves old or zombie debt, an attorney will understand the rights and processes to stop the collectors.

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If you or someone you know needs assistance with bankruptcy or foreclosure, call us at 708-575-1500 to work with one of our experienced attorneys.