State Statutes of Limitation on Debt Collection

Creditors and debt collectors have a limited time window in which to sue debtors for nonpayment of credit card bills. That limit is set by a state’s statute of limitations.

The debt collection statute of limitations refers to the time period window that a creditor or debt collector can legally sue you to collect. This period can range from 3 to 10 years, and varies from state to state. After this time period lapses, a creditor or collector can no longer use a court to force you to pay for a debt. The time period starts on the account’s last date of activity. Activity means taking any action with respect to an account, such as making a payment, making a promise of payment or entering into a payment arrangement. Any activity resets the clock to zero, no matter how much time had passed before the activity.

The purpose of these statutes of limitation: is to bring some measure of fairness to the debtor so that he / she will not have to worry about being sued for the rest of their lives; and (2) so that the debtor can properly defend himself with fresh evidence and witnesses, if any. This doesn’t mean that a creditor cannot file suit against you after the statute of limitations has expired; however, if a creditor or debt collector does file suit, you can ask the judge to dismiss the suit on the grounds that the statute of limitations has expired. In fact, if the statute of limitations is about to run on debt you owe, don’t be surprised if you suddenly hear from a collection agency threatening to sue if you don’t pay immediately.

Types of Agreements Covered by a Debt Collection Statute of Limitations:

• Open-ended Account- Revolving lines of credit with varying credit limits and balances. Credit cards and equity credit lines belong in this group.
• Promissory Note- A written contract spelling out repayment terms, such as interest rate, number of years to repay, late payment penalties, etc. Mortgages fall into this group.
• Oral Contract- An oral agreement to repay, but not written on paper. This is still considered a legally binding agreement, albeit more difficult to prove.
• Written Contract- You’ve signed a written agreement to repay, along with the creditor’s signature. A car loan is a good example of this type of contract.

What the Statute of Limitations Does Not Do: Prevent the debt from showing up on your credit report. This is determined by the credit bureau’s time limit allowed.Keep a creditor or collector from filing suit against you. They probably can’t win, but they can file suit. It doesn’t erase the debt. You still owe the debt, if it’s legitimately yours.

Are you being harassed by a debt collector for an old debt you thought was written off years ago? If so, it is likely you are being contacted by a scavenger debt collector which is a company that purchases older, mostly uncollected debt for a tiny fraction of its value. Scavenger debt collectors are notorious for using illegal and unethical methods to collect “time-barred” debt. You do not have to pay debt that is considered too old by your state. Every state has laws governing the time in which a person or entity can file suit to collect a debt. Generally, a creditor or debt collector gives up his right to file suit to collect a debt after a period of six years from the time the debt was written off (or the date of last activity on your credit report), but various states allow anywhere from 2 to 15 years .