Statute of Limitations for Unpaid Debts

Statutes of limitations are established to protect debtors from being exposed to debt collectors or creditors for a specific length of time and prevent those debtors from being exposed to legal actions for old debts.

What Is the Statute of Limitations for Debt?

The statute of limitations for debt is the amount of time during which a creditor is legally entitled to pursue collection actions against a debtor for an unpaid debt. A debt is considered past the statute of limitation when the creditor is no longer legally allowed to pursue the debt through the court system.

How Is Determined the Statute of Limitations on Debt Collection?

The statute of limitations on debt collection is determined by two factors: 1. The type of debt, and 2. The state in which the debt was incurred or specified in the contract. Therefore, the type of debt within the scope of the statute of limitations will depend on how the debt was created and the applicable law from the particular state. For example, it could be debt on a written contract, oral contract, open-ended contract (usually credit cards), or even promissory notes. In addition, it is important to know that the debt for a judgment obtained against you may have a different statute of limitations than a debt collection such as credit cards.

The following chart lists the statute of limitations for each state. To know if your debt is time-barred you must be aware of the specific laws for your jurisdiction.

State Collection of Debt on an Account Source For more information available:

Must I Pay a Debt That Is Passed the Statute of Limitations?

After the statute of limitations has expired, the creditor is barred from attempting to take any legal action against you to recover the debt, and you are no longer legally required to pay for your outstanding debts. However, it is important to understand that said debt technically exists and the debtor may still try to contact you requesting payment. The Federal Trade Commission(“FTC”) points out that if a debtor agrees to payments agreements or even makes a payment for a debt that is statute-barred, in some states, the debt is revived. For instance, if you agree to make a payment for an old debt or acknowledge the debt in any way, the statute of limitations is reset, and the creditor is now legally allowed to sue you for the debt that is owed. Also, even if the debt is statute-barred this does not mean that the debt may still not lower your credit score or make it more difficult for you to get a new line of credit. Attorney Mathew Higbee who has extensive experience representing clients with financial hardships says that “you must be aware of the statute of limitations on your unpaid debts to avoid restarting the clock because you could be exposed to costly consequences such as lawsuit, wage garnishments and negative credit scores”. It is crucial for you to protect yourself.

For more information, visit Debt Collection FAQs | Consumer Advice (ftc.gov)

How Should I Protect Myself?

There are a few important points that you need to know: • Track the statute of limitations on your debts, • Avoid making a payment on your debt with an approaching expiration date, • Do not acknowledge any debt that is statute-barred, and • Be careful how you communicate with your creditors to avoid resetting the clock.

If you are considering our debt relief program, it is important to be aware of the statute of limitations for your specific situation. Since the statute of limitations is complex and differs from state to state, our experienced attorneys are happy to help you and advise you about the best solution for your situation. If the statute of limitations has expired and a creditor tries to sue you, the best thing to do is contact one of our consumer attorneys.