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5 Things a Creditor Should Consider When a Customer Files for Bankruptcy

When a customer or client owes you money, it can be frustrating and even distressing to learn that the customer has filed for bankruptcy. It is important to remember that, just because a person or entity files for bankruptcy, creditors still may be able to collect some or all of the money owed to them. However, it is important to know what creditors can do, as well as what they cannot do, when a customer or client files for bankruptcy. The following is a list of tips from an Inc.com article for creditors.

  1. You Must Immediately Stop Trying to Collect on the Debt

When a person or party files for bankruptcy, all creditors and debt collectors must immediately stop trying to collect on the debt because of the automatic stay under the U.S. Bankruptcy Code. The automatic stay is a powerful tool for debtors who file for bankruptcy because it requires creditors and debt collectors to immediately cease collection activities. If a creditor attempts to continue collection actions of any type, the creditor can face a violation and substantial fees.

  1. Understand How the Type of Bankruptcy is Likely to Affect You

There are substantial differences between Chapter 7 bankruptcy filings (a liquidation bankruptcy) and reorganization bankruptcies under Chapter 11 or Chapter 13. When a debtor files for Chapter 7 bankruptcy, all non-exempt assets belonging to the debtor will be liquidation, and creditors will be paid from the amount of money obtained through the liquidation. However, there is an order of paying creditors, and priority debt gets handled first. Differently, in a reorganization bankruptcy, an individual or a business filing under Chapter 13 or Chapter 11 respectively will develop a repayment plan to get back on track financially. While a creditor ultimately may not see all of the money it is owed under a reorganization bankruptcy, the repayment plan will involve steps for repaying creditors a particular amount over a period of time.

  1. You Will Need to File a Proof of Claim

As a creditor you will have received notice of the bankruptcy filing, and that notice will provide you with information about the date by which you must file a proof of claim. A proof of claim is simply a document that a creditor files with the bankruptcy court to say that she or he has a claim against the bankruptcy estate. The proof of claim details the amount of money the debtor owes along with other information about the debt, and it clarifies whether the debt is a priority debt.

  1. You Can Ask the Debtor Questions at the Meeting of Creditors 

The meeting of creditors, which is also known as a “341 hearing” since its requirement arises under Section 341 of the U.S. Bankruptcy Code, is a time that creditors can meet with the bankruptcy trustee and ask questions of the debtor.

  1. Creditors Have the Right to Review a Repayment Plan in a Reorganization Bankruptcy

If the debtor has filed for Chapter 11 bankruptcy or Chapter 13 bankruptcy, the creditor has a right to review the repayment plan. More than half of the creditors must approve the repayment plan in order for the court to approve it.

Contact a Columbia Creditors’ Rights Attorney 

Do you have questions about your rights as a creditor when a debtor files for bankruptcy? An experienced Columbia creditors’ rights attorney can help. Contact Crawford & von Keller, LLC today.

 

Understanding Garnishment in South Carolina

When a debtor owes money to a creditor, there are a number of different methods that a creditor can use to collect debt that is owed. One of the remedies that is commonly available to creditors to whom debt is owed is garnishment. However, it is important for creditors in South Carolina to know that wage garnishment is extremely limited when it comes to collecting debts that were incurred in South Carolina. While there are some circumstances in which wage garnishment may be available, it is typically not an available remedy for debt incurred in the state. However, there are other types of garnishment that may be available to creditors in South Carolina.

What is Garnishment?

According to the Cornell Legal Information Institute (LII), a garnishment is an order issued by a court after a plaintiff has successfully won a civil claim against a defendant for monetary damages. The garnishment order “instructs a third-party who owes money to the defendant to pay some or all of that money to the plaintiff instead of the defendant.”

Wage garnishment is the most common form of garnishment. In a wage garnishment situation, the garnishment order instructs the employer (the third party here, also known as the “garnishee”) to withhold wages that it would pay to the employee (the defendant or debtor in the case), and to give those wages or a percentage of them to the plaintiff (or the creditor).

Creditors Can Only Get Wage Garnishments in Certain Situations in South Carolina

Under South Carolina law, wage garnishment generally is prohibited as a way for creditors to collect on consumer debts. South Carolina is one of only a small handful of states that prohibits wage garnishment for consumer debts. In other words, a creditor cannot recoup money that a debtor owes by obtaining a wage garnishment order for debts incurred in South Carolina. There are only a few exceptions:

  • Consumer owes money to the federal government (such as unpaid taxes or federal student loans);
  • Consumer owes child support or alimony; or
  • Consumer incurred the debt in another state that widely permits wage garnishment for consumer debt and the consumer now lives in South Carolina.

If you are a private creditor, it is unlikely that you will be able to garnish wages in order to obtain payment for debts that you are owed. For example, wage garnishment is not possible in South Carolina for credit card debt, medical debt, and other related types of consumer debt. Federal government creditors that are allowed to garnish wages must obtain a court judgment in order to do so.

Options Beyond Wage Garnishment for Seeking Payment of Debt

Even if you are a creditor that cannot garnish wages under South Carolina law, there are other options available for seeking repayment of debt. South Carolina, for instance, has several grounds for attachment. While a creditor cannot garnish or attach wages, it may be able to attach—or freeze—bank accounts and other assets in order to recover money owed.

However, attachment is only possible once the creditor seeks and obtains a judgment against the debtor.

Contact a Creditors’ Rights Lawyer in Columbia, SC

If you have questions about collecting debt through attachment, a creditors’ rights attorney in Columbia can help. Contact Crawford & von Keller, LLC for more information about the services we provide to creditors in South Carolina.

 

What Is the Difference Between Consumer and Commercial Collections?

When a creditor takes steps to collect on a debt, it is extremely important to recognize that there are distinctions between collection on consumer debt and collecting on commercial debt. Different laws govern consumer and commercial collections, and creditors need to be aware of the distinctions when moving forward to collect on a debt. The following is key information about the ways in which consumer and commercial collections often differ from one another.

The Fair Debt Collection Practices Act (FDCPA) Governs Consumer Debt Collections 

Consumer debts can be both small and large, and specific consumer protection laws regulate debt collection practices concerning individual debtors. When a consumer owes a debt, any collection actions are governed by the Fair Debt Collection Practices Act (FDCPA). According to the Consumer Financial Protection Bureau (CFPB), the FDCPA prohibits debt collectors engaging consumer collections from doing any of the following:

  • Contacting debtors before 8 a.m. and after 9 p.m.;
  • Contacting debtors at work after the debtor asks to stop communication at work;
  • Harassing debtors or anyone connected to the debtor; and
  • Contacting a debtor directing despite knowing that the debtor is represented by an attorney.

Creditors attempting to collect money owed from debtors are not governed by the FDCPA, however. As the CFPB explains, the definition of a debt collector under the FDCPA includes “collection agencies, debt buyers, and lawyers who regularly collect debts as part of their business.” If you are a creditor and collecting debts is not a regular business practice, the FDCPA is not applicable.

It is important to note that the FDCPA does not govern business debts when an individual owes business debts as a sole proprietor, for example. Creditors who are seeking to hire a debt collection agency should know that any business debts typically are handled by collection companies that specialize in commercial debt.

Commercial Debt Collections and the Commercial Collection Agency Association (CCAA)

Most creditors that are seeking to collect commercial debts will turn to a collection agency that is certified by the Commercial Collection Agency Association (CCAA). The CCAA has a declaration of fair practices that is designed to regulate commercial debt collection practices.

While creditors sometimes will attempt to collect on individual consumer debt before hiring a debt collection company, most creditors do use a debt collection company to collect on commercial, or business, debt. This debt most frequently is known as “business to business,” or “B2B” debt. Since commercial collections often involve larger amounts of money and more entities than consumer debt, a majority of creditors assume that it is worth the cost—and the amount of time saved—to work with a debt collection company that specializes in commercial collections. 

Contact a Columbia Creditors’ Rights Attorney 

Do you need assistance determining how to move forward on collection actions? Do you need help considering the best methods for consumer or commercial collections? An aggressive Columbia creditors’ rights lawyer can begin working with you today. The advocates at our firm have years of experience serving creditors in South Carolina, and we can get started on your case immediately. Contact Crawford & von Keller, LLC for more information.

 

When Can Creditors Object to a Bankruptcy Discharge?

In many cases, when a debtor owes money to a creditor in Columbia, South Carolina, the debtor ultimately will file for personal bankruptcy or business bankruptcy in order to seek a discharge. Some creditors will be repaid a relatively large portion of the debt owed if the debtor files for a reorganization bankruptcy under Chapter 13 (for personal bankruptcy) or Chapter 11 (typically for business bankruptcy). With a reorganization bankruptcy, the creditor receives a portion of the debt over a repayment period. With a Chapter 7 liquidation bankruptcy, however, the creditor is only eligible to receive payment from the amount of the debtor’s assets that are liquidated and make up the bankruptcy estate. Then, the creditor needs to be aware that priority debt is repaid first, and some creditors may not be eligible for much—if any—recompense.

Given that a debtor’s decision to file for bankruptcy often leaves the creditor with less than the total debt owed, many creditors want to know if they have any options to object to a bankruptcy discharge. Under the U.S. Bankruptcy Code, there are certain situations in which a creditor may be able to object to a discharge, and ultimately may be able to prevent the debtor from receiving a discharge of debts. The following are situations in which a creditor may be able to successfully object to a bankruptcy discharge.

Debts Are Non-Dischargeable

There are certain types of debts that are non-dischargeable in many or most circumstances under the U.S. Bankruptcy Code, such as alimony or child support debts, unpaid income tax debt, and other types of debts owed to a federal agency. If particular debts are non-dischargeable, the creditor can object to a discharge.

Debts Involve Fraud

Many situations in which creditors object to a discharge involve fraud or misrepresentation. Fraud can take many different forms. For example, a debtor might lie about assets or the value of assets on the bankruptcy petition or on bankruptcy schedules. Or, for instance, the debtor might unlawfully transfer property to another party to avoid liquidation immediately prior to filing for bankruptcy protection.

Fraud can also refer to situations in which a debtor provides false information at a bankruptcy hearing or commits perjury, or scenarios in which a debtor destroys property or documentation concerning the value of certain property. There are also other types of fraud that may not be as obvious. For example, if a debtor took cash advances on a credit card in the three months leading up to his or her decision to file for bankruptcy, that debt may not be dischargeable.

Debtor Engages in Intentionally Wrongful Acts

Certain actions concerning debt can also lead to a successful objection to discharge by a creditor. For instance, if a debtor intentionally caused damage to another party’s property with the aim of having the debts resulting from that damage discharged in a bankruptcy proceeding, the creditor may be able to object.

Contact a Columbia, SC Creditors’ Rights Attorney

To object to a discharge, the creditor needs to file a motion or a lawsuit (or adversary case) based on the type of debt to which it is objecting. An experienced creditors’ rights lawyer in South Carolina can discuss the details of the case with you to help you move forward. Contact Crawford & von Keller, LLC to learn more about how we assist creditors in South Carolina.

 

What is a Fraudulent Conveyance?

As explained by the Cornell Legal Information Institute, a fraudulent conveyance is a transfer of real property — money or assets — for the primary purpose of putting it outside of the reach of creditors. If a transaction is deemed to be a ‘fraudulent conveyance’ a creditor may have the right to void it. In this article, our Columbia, SC debt collection attorneys highlight the most important things creditors should know regarding South Carolina’s laws on fraudulent conveyances.

South Carolina Law: Fraudulent Conveyances

South Carolina is one of many states that has signed onto the Uniform Fraudulent Transfer Act (UFTA). The UFTA makes it a civil violation for debtors to transfer assets to a third party simply to avoid paying back creditors. A fraudulent conveyance is generally not a criminal issue. When such a transfer occurs, the UFTA provides a remedy to creditors, allowing them to get access to fraudulently transferred property that would have otherwise not been available to satisfy a debt. To prove a fraudulent conveyance occurred, South Carolina creditors are generally required to meet the following three elements:

  1. The debtor in question actually transferred assets;
  2. The debtor received less than fair market value in the transaction; and
  3. The debtor is insolvent or was made insolvent as a result of the transfer.

If a debtor receives fair market value for the transfer of property, then, by definition, a fraudulent conveyance has not occurred. The debtor’s ability to satisfy their obligations to creditors would remain unchanged. In addition, a debtor that is fully solvent cannot make a fraudulent conveyance, as all creditors would still be able to hold them responsible irrespective of the transaction.

When Does Intent Matter? Voluntary Conveyance vs. Valuable Consideration

In South Carolina, fraudulent conveyance claims come in two different forms: those involving a ‘voluntary conveyance’ and those involving ‘valuable consideration’. With a voluntary conveyance — meaning a transfer in which no compensation was offered or grossly inadequate compensation was offered — creditors do not need to prove that the debtor had an actual intent to defraud. The intent is deemed irrelevant if the debtor received nothing, or very little in the return for transferring property (Royal Z Lanes, Inc. v. Collins Holding Corp). In contrast, when ‘valuable consideration’ was offered to the debtor — even though that consideration may have been below the true market value of the property — the burden of proof flips. In this circumstance, a creditor must be able to prove that the debtor actually made the transfer with the intent of avoiding satisfying their debts to the creditor.

Get Help From a Columbia, SC Creditors’ Rights Lawyer Today

At Crawford & von Keller, LLC, our South Carolina collection attorneys have the skills and experience needed to handle the full range of fraudulent conveyance claims. To set up a fully confidential, no obligation consultation, please do not hesitate to contact our legal team today. From our office in Columbia, we represent clients throughout South Carolina, including in Richland County and Lexington County.

 

5 Things to Know About a Mechanic’s Lien in South Carolina

If you are a creditor involved in the construction industry or construction business in any capacity, you probably have heard about a mechanic’s lien. Sometimes creditors in the construction business are the companies directly supplying materials for construction, while in other situations creditors may be the contractors who are obtaining materials and supplying them to subcontractors or other workers on a construction project. While most states in the U.S. have mechanic’s liens—although they can be known as construction liens or property liens in other places—these legal documents can be difficult to understand. We want to tell you more about mechanic’s liens in South Carolina.

  1. Mechanic’s Liens Are Legal Documents Designed to Help Creditors Get Paid 

Under South Carolina law, mechanic’s liens are legal documents designed to ensure that creditors get paid. A mechanic’s lien is something that a creditor files when a debtor does not pay his or her construction-related debt. The South Carolina Courts defines the lien as “a security, charge, claim, or incumbrance against some specific property.”

  1. Creditors Can File Mechanic’s Liens for Debts Related to Construction Goods and Services

Mechanic’s liens can be filed for debt related to goods provided, but they can also be filed when debt for services rendered have not been paid.

The South Carolina statute clarifies that this type of lien is for situations when a debt is owed for labor performed or for materials offered and used in the creation or repair of a building or structure. Typically mechanic’s liens can involve costs for materials supplied, labor on the construction project, and other related services.

  1. Mechanic’s Liens Can Be Filed In Addition to Civil Lawsuits

If a creditor files a mechanic’s lien, this does not prevent the creditor from filing a civil lawsuit, or a breach of contract claim, against the debtor. To be clear, a mechanic’s lien is one type of remedy when a debtor does not pay a debt for construction-related costs—goods or services related to a construction project.

  1. Mechanic’s Liens Can Make It Difficult or Even Impossible for a Debtor to Secure Future Financing

The primary point of a mechanic’s lien is for it to encourage the debtor to pay the debt. The mechanic’s lien will show up on property searches and in public records, and it can make it difficult or even impossible for the debtor to secure future credit or financing (thus encouraging the debtor to pay off the debt).

South Carolina law does allow creditors to file a suit to enforce the lien when necessary.

  1. Many Different Parties May Be Able to File a Mechanic’s Lien 

As an article in The Balance explains, mechanic’s liens can be remedies for many different parties that have not been paid for supplies or services for a construction project. Often a general contractor will be the one who files a mechanic’s lien, but subcontractors and material suppliers also may be eligible to file a mechanic’s lien.

Contact a Columbia, SC Creditors’ Rights Attorney for Help With Your Case

If you have questions about filing a mechanic’s lien or other options for collecting a debt owed, you should speak with a Columbia creditors’ rights lawyer about your case. Contact Crawford & von Keller, LLC for more information.

 

Three Things Lenders Should Know About South Carolina’s Foreclosure Laws

Property foreclosures are far from rare in our region. In fact, a recent analysis from the credit reporting agency Experian found that South Carolina has the 7th highest foreclosure rate of any state in the country. For national banks and mortgage service providers operating in South Carolina, it is crucial that they have a basic understanding of our state’s foreclosure laws. Here, our Columbia, SC foreclosure attorneys provide an overview of three key things that national mortgage lenders should know about the foreclosure process in South Carolina.

    1. South Carolina is a Judicial Foreclosure State

South Carolina is a judicial foreclosure jurisdiction. In other words, mortgage lenders in South Carolina do not have a ‘power of sale’. A creditor cannot foreclose on a property by itself; state law requires mortgage lenders operating in South Carolina to take the borrower to court and — through a lawsuit — prove that they have the right to foreclose on a property. With a judicial foreclosure, the borrower has the right to raise defenses and file a counterclaim. As in other judicial foreclosure states, counterclaims are not uncommon in South Carolina. Lenders initiating a foreclosure must always be prepared to defend against a counterclaim. Our attorneys can help.

  1. South Carolina Follows the ‘Hammer Rule’

In foreclosure cases, some states give borrowers a ‘right to redemption’. Essentially, redemption is the ability of a borrower to buy back a property that has been foreclosed upon even after the foreclosure sale has already been completed. The right to redemption lasts for a pre-specified period of time, which varies from state to state. However, there is no right to redemption in South Carolina. Instead, the state follows the ‘Hammer Rule’. Once a foreclosure sale is complete, the homeowner’s rights to the property are fully extinguished.

  1. Deficiency Judgements are Permitted

Under South Carolina law (S.C. Code Ann. § 29-3-660), mortgage lenders have a right to seek a deficiency judgement after a foreclosure sale. A deficiency exists when the foreclosure sale price is insufficient to satisfy the full amount that the borrower still owes. For example, if the borrower owes $225,000 on their mortgage and the property is foreclosed on and sold for $210,000, a $15,000 deficiency remains. In South Carolina, lenders have a right to hold the borrower personally liable for that gap.

However, borrowers have appraisal rights in deficiency claims. If the fair market value of the property is deemed greater than the actual sales price, then that figure will be used for calculating any potential deficiency. So if the fair market value of the property was actually determined to be $230,000 instead of the $210,000 it was sold for, then there is no deficiency.

Contact Our Columbia, SC Foreclosure Lawyers Today

At Crawford & von Keller, LLC, our foreclosure lawyers have extensive experience representing national firms in South Carolina courts. With more than seven decades of collective legal experience, our attorneys are effective advocates for our clients. For a fully private consultation, please do not hesitate to contact us today. With an office in Columbia, we handle foreclosure cases throughout South Carolina.

 

Four Things Debt Collectors Need to Know About their Obligations Under the FDCPA

According to data provided by the National Consumer Law Center (NCLC), approximately one third of Americans have at least one debt in collection in 2017. With so many people dealing with debt collectors on a regular basis, a substantial body of law has been developed regarding how collectors can deal with consumers.

Under federal regulations, debt collectors must comply with certain requirements. Most notably, under the Fair Debt Collection Practices Act (FDCPA), a number of different obligations have been put on debt collectors. Here, our Columbia consumer collection lawyers explain four of the most important things that companies need to know about fulfilling their duties under the FDCPA.

  1. There are Restrictions Regarding Communication With Debtors 

The FDCPA puts considerable restrictions on how debt collectors can communicate with consumers. To start, collectors are generally limited to making collection efforts during normal business hours — 8:00 am to 9:00 pm in the location wherever the consumer resides. In addition, collectors must cease general communication with a consumer when requested to do so. Finally, debt collectors can only contact third parties in order to seek basic contact information for a consumer.

  1. Collectors Must Clearly State the Amount of the Debt

In making debt collection efforts, a company that is not the original creditor must always clearly state the amount of the debt being sought. The failure to do so could amount to an FDCPA violation. As an example, in the 2018 case of Park v. McCabe Trotter & Beverly, P.C., a federal court in South Carolina ruled that a law firm committed an FDCPA violation by including its attorneys’ fees in the total amount the debtor owed. The firm failed to indicate that its fees were included, simply sending the consumer a notice with a single number on it.

  1. The Debt May Need to Be Validated

Collectors have a duty to provide consumers with certain basic information to validate the debt. Specifically, in its initial communications, a debt collector should highlight the total amount of the debt and the name of the original creditor, and they should notify the consumer that they have 30 days to challenge the validity of the debt or it will be assumed valid.

  1. Abusive, Unfair Practices are Prohibited

Finally, abusive and unfair debt collection practices are prohibited under the FDCPA. Abuse and harassment can include things like coercion, threats, and intentional annoyance. Unfair practices can include tactics such as making false statements, misrepresenting potential legal consequences of not paying, and attempting to collect fees and penalties that are not permitted under United States law.

Speak to Our South Carolina Consumer Collection Attorneys Today

At Crawford & von Keller, LLC, our top-rated consumer collection lawyers always comply with all relevant legal requirements under the Fair Debt Collection Practices Act. We are committed to providing our clients with comprehensive, fully personalized legal guidance. To set up a strictly confidential initial consultation, please do not hesitate to contact our law firm today.

What Unsecured Creditors Should Know About Bankruptcy and Priority Debt

When a debtor files for bankruptcy, debts are repaid to creditors according to their “priority.” The U.S. Bankruptcy Code sets the order of priority for claims, which means that certain debts will be paid (or, in other words, certain creditors will be paid) before others. It is important for creditors in Columbia, South Carolina to learn more about how priority debts are classified and to understand how priority debts can affect payouts to creditors in bankruptcy cases.

How the U.S. Bankruptcy Code Defines Priority Debt

Under § 507 of the U.S. Bankruptcy Code, certain types of claims receive “priority” status, which means that they must be paid first out of the bankruptcy estate. Generally speaking, secured debt is not going to be in consideration under § 507 since those creditors typically can repossess property in order to pay off the debt owed. What kinds of debts, then, are priority debts? The U.S. Bankruptcy Code lists some of the following as priority debts:

  • Debt for domestic support obligations;
  • Administrative expenses tied to certain loans;
  • Certain wages, salaries, and commissions;
  • Certain contributions to an employee benefit plan;
  • Certain tax debt;
  • Certain penalties owed; and
  • Money owed from personal injury claims arising from DUI accidents.

There are other types of priority debts, too, and an experienced Columbia creditors’ rights lawyer can help you if you have questions about seeking the money you are owed. To be clear, whether a claim is classified as a “priority” depends on the type of debt that is owed (although priority debts typically are unsecured debts).

Priority Debts That Cannot Be Discharged

In some cases, creditors who are owed priority debts that cannot be discharged can be in a good position to get repaid when the debtor files for bankruptcy. For example, tax debt and child support debt are both “priority” debt, as are debts owed for personal injury judgments in DUI cases. As an example, most tax debt cannot be discharged in a personal bankruptcy case. Since it is not dischargeable but is also a priority debt, this means it will get paid before any creditor for a non-priority debt receives any money. Since the tax debt could not be discharged in the bankruptcy anyhow, getting paid out of the bankruptcy estate typically is a good thing because it means some of that debt will get repaid, whereas attempts to collect on that debt otherwise could prove difficult.

At the same time, creditors of non-dischargeable, non-priority debt can end up receiving nothing from the bankruptcy estate. It is rare for debtor to have funds to repay all creditors entirely. If this were the case, the debtor likely would not have filed for bankruptcy in the first place.

Regardless of whether you have a priority debt, in order to receive payment from a bankruptcy estate, an unsecured creditor must file a proof of claim, which registers the creditor’s claim against any assets from the bankruptcy estate. In the proof of claim, the creditor clarifies the amount it is owed and whether the debt has priority status.

Contact a Columbia Creditors’ Rights Attorney

If you have questions about collecting on a priority or non-priority unsecured debt from a bankruptcy estate, you should discuss your options with a Columbia creditors’ rights attorney as soon as possible. Contact Crawford & Von Keller Law Firm for more information.

 

Creditors Should Know About Time-Barred Debt

If you are a creditor that is attempting to collect on a debt that is owed, it is essential to understand how time-barred debt could impact your ability to collect. In short, there is a statute of limitations on debt. After a specific amount of time passes (that time window is specified by the statute of limitations), a creditor no longer has the right to file a lawsuit against the debtor in order to seek the money owed. However, when a debt becomes time-barred, this does not mean that the creditor is left without any remedies. We will say more about the statute of limitations and how it affects time-barred debt, and then we will say more about other possible remedies for creditors who are owed time-barred debt.

Old Debt and the Statute of Limitations

The statute of limitations is a particular period of time that exists—a time window—in which a party can file a lawsuit or seek a legal remedy in a court of law. Statutes of limitations exist for many different legal issues, including consumer and business debt. Under South Carolina law (S.C. Code § 15-3-530), the statute of limitations for most types of consumer and business debt is three (3) years. As an article from the U.S. Federal Trade Commission (FTC) explains, the statute of limitations typically begins “ticking” once a debtor fails to make payments on the debt. More specifically, this is the time window for claims arising out of contracts, obligations, and liabilities, which tend to include most agreements between creditors and debts.

If a debtor fails to make payments to a creditor, one of the remedies the creditor has in order to seek repayment is to file a civil lawsuit against the debtor. However, this lawsuit must be filed within three years, or else the creditor is barred from filing a claim. This is what is known as “time-barred” debt. Once a debt has become time-barred, the creditor is no longer able to sue the debtor. However, other remedies may be available to creditors who are attempting to collect on time-barred debt.

Reviving Time-Barred Debt in South Carolina

One way in which creditors in South Carolina may be able to continue seeking the money they are owed is if the debt is revived. What does it mean to revive time-barred debt? First, just because a debt is time-barred does not mean that a creditor (or a debt collector, if the creditor has passed the debt onto a collection agency) cannot continue to contact the debtor in order to seek the money that is owed. To be clear, attempting to collect through contact with a debtor is not time-barred even if the possibility of filing a lawsuit is now time-barred.

When a creditor contacts a debtor about time-barred debt, the debtor may “revive” the debt. Under the South Carolina Consumer Protection Code and § 15-3-120 of the South Carolina Code, a debtor can “revive” the debt by acknowledging that it is owed in writing. The law in South Carolina also makes clear that, when a debtor decides to pay any part of the principal or interest on a debt—even if it is time-barred—that payment is equivalent to making a “promise in writing,” and as such the debt is revived. Once a debt is revived, it is no longer time-barred and the creditor may be able to file a lawsuit.

Learn More from a South Carolina Creditors’ Rights Lawyer

Creditors may have additional options to seek payment for time-barred debt, and a Columbia creditors’ rights lawyer can help. Contact Crawford & Von Keller Law Firm to learn more.