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No they cannot legally sue you for the expired debt and they could not apply the money you paid specifically for one account to another account. The statute of limitations on that account does not renew merely because they misapplied payment to it that they had no business doing as it was contrary to your contractual agreement.
Thus you need to start by writing them a letter and you need to inform them your contractual agreement was to make payments on the specific account and give them the number. Tell them they were in breach of contract by not applying the payments properly and they have to correct the breach and give you the proper pay off amount.
If they refuse to make the correction, then you can sue them for breach of contract and the court will order them to adjust your account and take the funds away from the other account.
The statute of limitations begins with the last payment on the account, but if they improperly paid the account it does not renew the statute of limitations.
In ME, if they get a judgment against you, which they should not on the old account because it is beyond the statute of limitations, they can garnish wages (not retirement or SS income) and they could place liens on any property that you own (real estate or vehicles).
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