You sign an auto financing contract on January 1st, 2006 where
the first payment of $300 is due on February 1st, 2006.
In February, you never make a payment towards your debt.
The SoL expires on February 1st, 2012 (assuming you live
in Alabama where the SoL period is 6 years). Why Feb 1st?
This is because Feb 1st was the last time you made a delinquent
payment on your loan, or this was your last missed payment.
The SoL period starts counting from your last missed payment.
you receive a call from a debt collection company that instead
of paying $300/month, you pay $150/month. You receive this
call on March 1st, 2008 (2+ years have expired on the SoL
period). This offer sounds pretty good to you and you indeed
do make the payment! Hey! The SoL period at this point automatically
resets to 0 and will run for another 6 years!
every payment you make towards credit card or personal loan
debt resets the SoL clock. This resetting of the SoL clock
applies only to unsecured debt and NOT secured debt. This
is because in Secured Debt, the lender will simply confiscate
your collateral (a pledged home, your car, etc) and will
not have to deal with collection issues.