If an individual borrows money from a lender, the borrower is responsible for paying that money back. The loan terms are usually spelled out in a written contract between the borrower and the lender. Lenders tend to favor written contracts because they are easier to enforce compared to verbal agreements. Typically, a lender has the right to take a borrower to court to collect a loan balance if that person fails to make payments on time.

If a creditor obtains a judgment against a borrower, it may be possible to garnish the debtor’s wages. However, a creditor usually has a limited amount of time to take steps to obtain the money it is owed. In New York, the statute of limitations to collect a debt is six years. In Florida, creditors generally have five years to collect an outstanding credit card or other debt balance.

The statute of limitations clock begins on the last day that there was activity on an account. Debtors may engage in activity on their accounts by making payments or simply acknowledging that their debts are legitimate. All parties to a loan are encouraged to keep careful records to help them determine if the statute of limitations has passed in a debt collection case.

Individuals who are involved in a contract dispute may benefit from hiring business law attorneys. An attorney may be able to review a contract to determine what actions may be taken against those who have failed to abide by its terms. Legal counsel may attempt to have a case dismissed if the statute of limitations has passed. If an individual is ordered to make a payment, an attorney might help negotiate a payment plan in an effort to avoid a wage garnishment.