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by Jesse Campbell on May 09, 2016

Understanding the statutes of limitations on debt 

The following is provided for informational purposes only and is not intended as legal advice or credit repair.

When it comes to old, unpaid debts, there’s a bit of confusion around the term “statute of limitations.” Specifically, consumers are sometimes under the belief that taking certain actions with old, delinquent debts can prolong the amount of time those debts stay on your credit report. Statutes of limitations can be complicated, especially as they relate to debt, so here’s what you need to know in order to make the best choices for your unique circumstances.

Impact on your credit report

For starters, a debt’s statute of limitations has no bearing on your credit report. When you get a negative mark on your credit history (by missing a payment, for example), that negative mark remains on your credit report for 7 years. (In the case of certain events, such as a Chapter 7 bankruptcy, some negative marks may be reported for up to 10 years.)

If that negative mark is legitimate (and not an error), then it will not go away until those 7 years have passed. These is no way to “reset the clock” on such negative marks. There is no action you can take that will make them disappear sooner, or stick around longer.

As time goes by, these old negative marks have less and less impact on your score. This means that while a five year old delinquency will still show up on your credit report, it won’t necessarily prevent you from having a good score.

Legal consequences

The statute of limitations on a debt ultimately dictates whether or not a creditor can sue a debtor over an unpaid debt. Once the statute of limitations on a debt has run out, the creditor loses a good deal of leverage. It does not mean, however, that they won’t continue to attempt to collect the debt.

When does the clock start?

While every state has its own laws, per the Federal Trade Commission, the “clock” generally starts at the moment you miss a payment and your account becomes delinquent. If the statute of limitations is 3 years and you missed a payment due on May 1, 2013, then by the end of the day on May 1, 2016 that debt will likely be considered “time-barred.”

Time-barred debts

Technically, a debt collector or creditor cannot sue you for a time-barred debt. They can, however, continue to attempt to collect the debt. They will most likely continue normal collection practices until you send a cease and desist letter ordering them to discontinue contacting you.

It’s also important to keep in mind that a creditor may still attempt to sue you over a time-barred debt. If this happens, it is your responsibility to respond to the summons and make your case in court. Don’t assume that because the statute of limitations has run out that you don’t need to take action. The court will very likely rule in favor of the creditor if you do not appear in court.

If you want to avoid having your wages garnished, go to court and present evidence that the debt in question is time-barred and beyond the statute of limitations.

Reviving the debt

Unlike negative marks on your credit report, the countdown on the statute of limitations can be reset or “revived” if you take certain actions. If you make a payment on an old, delinquent debt, the statute of limitations is reset. In fact, if you simply admit that the debt is yours while speaking to a collection agent over the phone, the statute of limitations may be reset.

The best course of action is usually to avoid claiming a debt unless you plan to pay it off in full. If you’re contacted about an old debt, ask for verification, as well as the date of the last payment.

Statute of limitations on debt for all states

So when will the statute of limitations on your debt run out? Well, laws differ from state-to-state. It also depends, in part, on the nature of the agreement under which the debt was accrued. That means that in any one state the statute of limitations for a debt may be different if the agreement is written (a personal loan), open-ended (a credit card), oral (spoken, but not captured in writing), or a promissory note.

Here are the lengths of the current statutes of limitations for debt in all 50 states. Please keep in mind, laws change and when it comes to legal matters, your best bet is always to speak with a qualified attorney.

  • Alabama: 3 years (W, OE), 6 years (O, PN)
  • Alaska: 3 years (W, OE, PN), 6 years (O)
  • Arizona: 3 years (OE, O), 5 years (PN), 6 years (W)
  • Arkansas: 3 years (O, PN), 5 years (W, OE)
  • California: 2 years (O), 4 years (W, OE, PN)
  • Colorado: 6 years (all)
  • Connecticut: 3 years (O), 6 years (W, OE, PN)
  • Delaware: 3 years (all)
  • D.C.: 3 years (all)
  • Florida: 4 years (OE, O), 5 years (W, PN)
  • Georgia : 4 years (OE, O), 6 years (W, PN)
  • Hawaii: 6 years (all)
  • Idaho: 4 years (O), 5 years (W, OE, PN)
  • Illinois: 5 years (OE, O), 10 years (W, PN)
  • Indiana: 6 years (OE, O), 10 years (W, PN)
  • Iowa: 5 years (O, PN), 10 years (W, OE)
  • Kansas: 3 years (all)
  • Kentucky: 5 years (OE, O), 15 years (W, PN)
  • Louisiana: 3 years (W, OE), 10 years O, PN)
  • Maine: 6 years (all)
  • Maryland: 3 years (W, OE, O), 6 years (PN)
  • Massachusetts: 6 years (all)
  • Michigan: 6 years (all)
  • Minnesota: 6 years (all)
  • Mississippi: 3 years (all)
  • Missouri: 5 years (all)
  • Montana: 5 years (O), 8 years (W, OE, PN)
  • Nebraska: 4 years (all)
  • Nevada: 4 years (all)
  • New Hampshire: 3 years (all)
  • New Jersey: 6 years (all)
  • New Mexico: 4 years (all)
  • New York: 6 years (all)
  • North Carolina: 3 years (W, OE, O), 5 years (PN)
  • North Dakota: 6 years (all)
  • Ohio: 6 years (all)
  • Oklahoma: 3 years (OE, O), 5 years W, PN)
  • Oregon: 6 years (all)
  • Pennsylvania: 4 years (all)
  • Rhode Island: 10 years (all)
  • South Carolina: 3 years (OE, PN), 10 years (W, O)
  • South Dakota: 3 years (O), 6 years (W, OE, PN)
  • Tennessee: 6 years (all)
  • Texas: 4 years (all)
  • Utah: 4 years (OE, O), 6 years (W, PN)
  • Vermont: 3 years (OE, O), 5 years (W), 6 years (PN)
  • Virginia: 5 years (PN), 6 years (W, OE, O)
  • Washington: 3 years (O), 6 years (W, OE, PN)
  • West Virginia: 10 years (all)
  • Wisconsin: 6 years (W, OE, O), 10 years (PN)
  • Wyoming: 8 years (OE, O), 10 years (W, PN)

As you may have noticed, the statute of limitations is almost never 7 years. This means there may be circumstances where a debt is time-barred but still on your credit report. Conversely, a creditor may still be able to sue you for a debt that’s aged off your credit report. This is why it’s important to understand the laws of your state so you can make informed decisions.

Comment(s)

Andrew says:
October 10, 2016

We live in Oregon. We fell under hard, financial times in 2010 when we made our last house payment (Dec 1, 2010 payment). We ended up walking away from our home when we got the first auction notice (for Summer of 2011), but they never finished the foreclosure. BofA sold our loan to PennyMac, and they continue to call us every day to bring the loan current (that is if we have about $90k to bring the loan current). Every now and then we'll be served with legal papers, but then the following month served again with legal papers where the bank is asking to dismiss the case they brought forth the month before. Every month our credit report takes a hit from these missed mortgage payments. If my last payment was for the December 2010 payment, then I am at the 6 year mark this December. Do I do a cease and desist letter at this point? Any advise is helpful.



Annonmous Debtor says:
May 12, 2016

If a debt was incurred in one state, and the debtor lives in another, which state's law prevails?



Jesse says:
May 17, 2016

If the agreement behind the debt was created in one state and then you move to another, the creditor will most likely cite the laws of the state where the debt was originated. However, if the laws in the debtor's current state are more favorable to the debt collector, they may attempt to cite those laws instead. If you find yourself in such a dispute, you should probably speak with an attorney (assuming the debt is sizable enough to warrant that).



Jesse says:
May 12, 2016

Hi Patricia - Unfortunately, debt collectors don't necessarily care if a debt is past the statutes of limitations in your state. When speaking with a collector about an old debt, don't confirm that the debt is yours. Say, "I don't know if this debt is mine or not. When was the last payment made?" If the debt is beyond the statutes of limitations in your state, you can advise the collector that the debt is "time-barred" (again, without claiming the debt) and ask the collector to stop calling you. If they continue calling you, send them a letter requesting that they cease contacting you regarding the debt. If they continue even after they've received your written request, you can file a complaint with the Consumer Federal Protection Bureau or your local Attorney General's office.



patricia burman says:
May 12, 2016
Website: AOL

I have used Money Management many years ago but am getting calls from "collection"agency telling me I have to repay something that I THOUGHT WAS CLEAR SINCE IT'S BEEN OVER7 OR 8 YEARS ARE THEY LEGAL?



Phil Danley says:
May 21, 2016
Website: www.ConsumerDebtCoach.com

I am not an attorney but my understanding of SOL is that it is a defense you must raise if a collector attempts to sue you. If you do not appear in court to claim this is a time-barred debt, a default judgment can be awarded against you.And as you stated, collectors can attempt to collect from you forever. The SOL does not eliminate a debt and a debt that is not on your credit report is still in effect.



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