Public Financial Knowledge Infrastructure: Expired vs. Extinguished Debts

This is a topic I’ve written about before, but not in detail, as part of Project Do Better’s Phase I piece, Public Financial Knowledge Infrastructure.

In most states, expired is merely ‘unenforceable’ except that you have to defend by showing the court that the debt is expired. That is why so many suits (around 90%) win by default, as people rarely show up in court to defend, and so that expired debt then gets a loss by default, followed by a money judgement, often on expired, and thus Time-Barred, or, unenforceable or even

unvalidated debts, , past the SoL.

Unfair and injust, but frequent.

Two states do ‘extinguish’ the debts after some years (13 yrs, if I recall correctly, in the case of MS), but an expired debt is not extinguished, just legally unenforceable. The problem with that is the need to defend on the unenforceability. (Note that this should not be confused with the 7-year limit on credit reporting by CRAs…)

I find it incredibly obviously stacking the deck to require a defendant to appear in court just to say that the debt is expired, and so cannot be enforced! That is something that constituents can write to their state legislators about changing, and so I wrote a sample letter a few years ago, which should still be reasonably useful, I hope.

Some states now allow the fact that a debt is expired to be stated in ‘The Reply’ to the summons, btw, so that the case can be dismissed, due to clogged courts, but even in those jurisdictions, people have to know to do this, and most folks don’t know, which is addressed in Phase I’s Public Financial Knowledge Infrastructure section of Project Do Better:

“The Honorable Lorena Gonzalez Fletcher
California House of Representatives
1350 Front Street
Suite 6022
San Diego, CA 92101
Tel: 619-338-8090
Fax: 619-338-8099

your name
city, state zip
your phone

Dear Assemblywoman Gonzalez Fletcher,

I would like to request a bill which would benefit California residents. The state of Maryland has recently passed a law prohibiting lawsuits on any debts which have passed the Statute of Limitation ( ). While California requires notification if a debt is expired, many debtors are not able to use that information. And while debt buyers are prohibited from suing on expired debts in California, original creditors are not. Many creditors, like exploitative landlords and lenders, never sell their debts, waiting years to sue, until details of the situation are less clear. Most lawsuits are won by default, even on invalid debts. The key injustice is that proportionately more poor debtors are sued than well-off debtors (due to the fact that the Statute of Limitation must be explicitly raised as a defense by the debtor in CA). Hence, growing numbers of illegitimate judgments against those who do not have either the time or the ability (due to illness, etc) to defend themselves. Debt, credit reporting, and court action can have a direct bearing on citizens’ abilities to access employment and housing. Disallowing suits on all expired debts could help correct this injustice.

sig “



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21 thoughts on “Public Financial Knowledge Infrastructure: Expired vs. Extinguished Debts

  1. My Senator, Maggie Hassan, put through a law about “surprise medical bills” which bans them. I was a victim of this in March with my hospital stay. When they transferred me to a different hospital, I asked if the ambulance ride would be covered and was told it would be since the hospital ordered it. Imagine my surprise when I got a bill for almost $6,000 because my insurance paid only a little over $1,000. Reported and done with it. I was not in immediate danger and could have had my spouse drive me.

    The deck is stacked against people in so many ways and it’s so unfair.

    Liked by 4 people

    1. The deck is stacked, very unfairly, but the promise of our Founding Documents is the ideal that once we’ve read those sublime words in our legal framework, we have the duty to keep pushing to make them a reality for all of us, or at least to bear witness to the fact that it is indeed possible.

      I think that is the hope of living in a republic, or even better, a democracy like Switzerland, but with a more open attitude toward protecting both all citizens, and even all residents and people of the world beyond our borders (once we have set our own house in order…).

      Liked by 7 people

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