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Money Recovery

How Long Can A Debt Collector Legally Pursue Old Debt In India?

If you are wondering how long a debt collection agency can legally pursue an old debt, then you have come to the right place because we will discuss the time limit of debt recovery in this blog.

When you get into a contract to borrow money (or “credit”), there will be a specified timeframe by which you must repay your debts. If you don’t pay back what you owe by the due date, your lender (or “creditor”) may pursue you for payment by letters and, after some time, through legal action.Your lender may run out of time to get what they’re owed, and the debt may then become void (statute-barred). In this blog, we will discuss how long a debt collection agency can pursue an old debt in India.

Is There A Time Limit For Pursuing A Debt?

Each state has a different statute of limitations on debt, and after it has passed, a debt collector cannot legally pursue you for repayment in court. Debt collectors may, however, continue to pursue old debts even after the statute of limitations has run out in many locations.

Each debt has a time limit. A debt becomes statute-barred after a certain amount of time.

India’s Statute of Limitations for Debt Recovery

The statute of limitations, often known as the “limitation period,” is the time frame within which one must file any grievances relating to a certain problem. The courts must deal with a case if it is brought up before the deadline. 

But let’s say a matter is raised after the deadline has passed. In that situation, the court is not required to address the matter.

The presiding judge will next review the facts of the case and determine whether or not the case should move forward. The Limitation Act of 1963, establishes the limitation periods in various events and circumstances, including the statute of limitations for debt collection.

The Statute Of Limitations For Debt Recovery Is Three Years From The Day The Money Was Lent.

Suppose that three years after the loan, there isn’t any dispute over the money. In that situation, the statute of limitations has passed, and the court is entirely within its rights to decline to hear the matter.

Naturally, This Raises The Question Of Why The Statute Of Limitations Is Established For Three Years From The Date Of Lending Rather Than The Default Date. This Is Because

  • lenders are presumed to not give loans for terms longer than three years. All long-term loans in the 1960s had terms of no more than three years since money lenders lacked the resources to monitor a loan for a longer time frame. 
  • It is reasonable to assume that if a borrower has been repaying a loan in installments with interest for three years without running into any problems with the lender, 

Any default that occurred after that point was likely to be purely circumstantial and not fraudulent, negating the need for the court to get involved.

The lengths of loans have recently, however, been significantly beyond three years due to corporate practices and technical advancement. Therefore, a provision was added to the statute to keep up with the times.

According to the clause, the statute of limitations starts to run after three years if the lender can obtain a borrower’s acknowledgment of the amount owed.

Therefore, the statute of limitations on the potential default of each payment will be safely available for three years provided a lender receives a monthly acknowledgment from the borrower until the last installment has been paid.

The “condonation of delay” clause, in addition to specific remedies, provides a general one for all delays. 

According to this clause, the law will excuse a delay and allow the resolution of a case if the plaintiff can demonstrate that the delay was unavoidable and that they had intended to file a lawsuit within the statute of limitations but were prevented from doing so.

How Does Debt Collection Work?

Debt collection is a process by which creditors or debt collection agencies attempt to recover money owed by individuals or businesses. The process typically involves the following steps:

  1. Issuing Invoices and Notices:

   – Creditors usually start by sending invoices and reminders to the debtor, notifying them of the outstanding debt.

  1. Phone Calls and Communication:

   – Debt collectors may contact debtors through phone calls or written communication to discuss the debt, negotiate payment terms, and provide information on the consequences of non-payment.

  1. Debt Collection Letters:

   – Formal debt collection letters may be sent, outlining the amount owed, the creditor’s details, and a deadline for payment. These letters serve as a legal record of the debt collection efforts.

  1. Negotiation and Settlement:

   – Negotiations may take place between the debtor and the creditor to reach a settlement, often involving a reduced amount or a revised payment plan.

  1. Legal Action:

   – If voluntary repayment is not achieved, creditors may take legal action. This could involve filing a lawsuit to obtain a court judgment against the debtor.

  1. Enforcement of Court Judgment:

   – If the court rules in favor of the creditor, enforcement measures may be taken, such as wage garnishment, bank account levies, or the seizure of assets.

  1. Credit Reporting:

   – Unpaid debts may be reported to credit bureaus, impacting the debtor’s credit score and making it challenging for them to obtain credit in the future.

  1. Bankruptcy Proceedings:

   – In extreme cases, debtors may file for bankruptcy, leading to a discharge of certain debts. However, this has significant consequences for the debtor’s creditworthiness.

Limitations on Debt Collection by State

Time-Barred Debt in India:

  1. Time-Barred Debt Period in India:

   – The concept of time-barred debt refers to the limitation period during which creditors can legally pursue the recovery of a debt. In India, the Limitation Act, 1963, sets specific time limits for different types of debts.

The limitation period for recovery of debt under a simple contract is 3 years from the date on which the debt becomes due. However, there are certain exceptions.

Credit Card Recovery Rules in India:

  1. Supreme Court Judgment on Credit Card Defaulters:

   – The Supreme Court of India has addressed the rights and limitations of credit card companies in pursuing legal action against defaulters. Understanding these rules is crucial for both creditors and debtors. To know more, request a callback from our experts right away!

Navigating the intricacies of debt collection involves knowledge of legal regulations, negotiation skills, and compliance with state and national laws. Time-barred debt period in India, credit card recovery rules, and Supreme Court judgments are significant considerations in the debt collection landscape in India.

What Happens If A Debt Collector Is Pursuing You After The Statute Of Limitations Has Passed?

Consumers are covered by a variety of rights when it comes to debt collection efforts, especially after the statute of limitations has run out. 

If a debt collector contacts you regarding an old debt, the most crucial thing to keep in mind is to resist saying that you are responsible for the debt. You shouldn’t accept responsibility for any debt that a debt collector claims you owe right away for three main reasons:

A mistake by a debt collector is very common because old debts are frequently transferred from one collection agency to another. They may not be owed the money they claim you are. It might be the property of a person with a similar name or someone who once had your phone number.

The statute of limitations may in some circumstances be reset by claiming the debt. Making an expired debt fresh again is the last thing you want to do.

The caller may be a con artist. Make sure you avoid paying a false debt collector money that you don’t actually owe in order to avoid falling victim to debt collection scams. Never send a payment or divulge personal information, including debt information, over the phone.

Additionally, you have the right to write the collection agency a “stop communication” letter. The agency must stop contacting you about your debt once you’ve delivered this letter. The debt collector is only permitted to get in touch with you now for one of two reasons: 

Either to let you know that it has received the letter and will cease calling or to let you know about a specific action it is conducting against you (such as filing a lawsuit).

What Does The Term “Statute-barred Debt” Mean?

The law may be on your side and declare the money you owe to your creditor as statute-barred, or, unneeded to pay back, 

if your lender doesn’t pursue you for any unpaid debts within a predetermined period. It’s crucial to understand that just because a debt has passed its statute of limitations, it persists. Although you might not have to repay the debt, your creditor is within their rights to pursue you for it because doing so could help your credit report.

Failure to pay debts back will leave a mark on your credit reference file and make it more difficult for you to obtain credit at a reasonable rate of interest, even for statute-barred debts.


We hope that after reading the information above, you now understand that every debt has a due date. In other words, a debt  Recovery agency has a deadline for collecting an old debt. Contact Vakilsearch right now if you need help managing your debt. Their expert team of legal professionals will assist you with every legal matter.

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