It’s more or less a compromise between being able to protect people from old debts hiding and finding them after years, and lending companies who want a reasonable time to recollect their debts.
If you make it too short, then lenders will be more strict to who they lend, making it harder for people to get credit. Suddenly John Smith can’t buy a new fridge on credit when his old one blows up, and he’s fucked.
If you make it too long, then you can end up in situations like someone owing a small amount on a debt that is just allowed to collect interest for a decade and become unruly.
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It’s more or less a compromise between being able to protect people from old debts hiding and finding them after years, and lending companies who want a reasonable time to recollect their debts.
If you make it too short, then lenders will be more strict to who they lend, making it harder for people to get credit. Suddenly John Smith can’t buy a new fridge on credit when his old one blows up, and he’s fucked.
If you make it too long, then you can end up in situations like someone owing a small amount on a debt that is just allowed to collect interest for a decade and become unruly.
It’s not just that, but also about the statutory time records must be kept for accounting purposes.