North Carolina has some of the most consumer-friendly debt collection laws in the country. Auto loan contracts are classed as written contracts and have a statute of limitations of three years. As long as the statute of limitations has not run out, creditors are permitted to take action to collect unpaid auto loans. However, certain circumstances will cause the clock on the statute of limitations to reset.
Identification
An auto loan contract is a legally binding agreement between a payee and a payer. The contract identifies the names of the parties involved as well as the terms and conditions of the auto loan. Other key information included in the contract is the origination date of the loan and the date of the first scheduled payment. The clock starts ticking on an auto loan on the date of the last activity on the contract, such as a payment. To find the date your last payment was received or the discharge date of your auto loan, check your consumer credit report. Written contracts remain on your consumer credit report for up to seven years.
Time Frame
In North Carolina, the statute of limitations on written contracts is three years, which is the shortest in the country. Only five other states have a similar statute of limitations, including Mississippi, Delaware and New Hampshire. Some of the states with the highest statute of limitations in the country include Rhode Island, Missouri and West Virginia.
Considerations
According to North Carolina debt collection laws, a creditor must bring legal proceedings against a debtor before the statute of limitations expires or forfeit the right. In other words, if a creditor fails to sue a debtor for the repayment of an auto loan before the statute of limitations expires, it forfeits it's right to do so in the future.
Judgment
If a creditor sues in court for an unpaid auto loan and wins a judgment for the remaining money owed on the contract, the judgment will remain on your consumer credit report for up to 10 years. The clock starts ticking from the issue date of the judgment. To win a judgment, the creditor must provide the original signed auto loan contract and any cancelled checks to prove breach of contract.
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