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Charge off and statute of limitations

Detroit, MI |

i have an auto loan charge off from 2005. when does the statute of limitations expire? i was taken to court over the debt in 2008. Can they take me to court again or garnish my wages? I would like to settle the account, but the interest kept adding up over the past five years. I need assistance.

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Attorney answers 3


A "charge off" is an accounting term used to indicate that a debt hasn't been paid in more than 180 days. It doesn't mean that the creditor isn't legally entitled to collect the debt and it doesn't mean that the creditor won't sue you to collect on the debt. When this phrase is on your credit report, it is one of the more damaging items that can appear.

The statute of limitations only applies when a debt hasn't been taken to court. Since you say you were taken to court in 2008, I would guess that the creditor already has a judgment against you. With a court judgment, a creditor has many options to enforce payment of that judgment. In most states, they are allowed to seize bank accounts, garnish wages and file a lien that affects any property you own. What they may not seize is defined by state laws known as exemptions. You may wish to review these laws on the state website.

Of course, the creditor is going to keep adding interest to the judgment. State law provides for interest to be added to the judgment & the longer you wait to pay, the more you will owe. It sounds like you have been very lucky so far that this creditor has not started seizing your property to pay this judgment.

Hope this perspective helps!


Your question is a little vague, but if I understand it correctly, your auto lender charged off your debt in 2005, but is sued you in 2008 and obtained a judgment? If that's the case, then there is no "statute of limitations" at work here - there is already a judgment against you, and the creditor is now trying to collect upon it. They won't "take you to court" again if they already have a judgment - they don't need to. They could, however, start garnishment proceedings. If they aren't interested in settling (the judgment, not the account - the account is meaningless now), then you'll have to pay them or find a way to either avoid them or file bankruptcy to eliminate the judgment.

This answer is not to be considered a response to a specific legal issue in a specific jurisdiction - it is to be considered only a general response to a hypothetical scenario posed by the questioner. For specific legal advice, please consult with a licensed attorney in your jurisdiction.


The statute of limitations is generally no longer applicable once a creditor has a judgment. They also do not have to take you back to court again to attach assets. If they find your job or bank account, they can attach wages or accounts relatively quickly. Despite the balance that you now owe, you can certainly offer to settle for whatever you'd like to offer. All they can say is no. However, if you have other debt you cannot handle, I'd suggest seeking advice from an experienced bankruptcy attorney in your area before doing anything. The last thing you probably want to do is scrape together money you really can't afford to waste in order to settle a debt, only to still need a bankruptcy for your other debts. Good luck.