Statute of Limitations: When Creditors Can—and—Can't Sue You for Old Debts

If you have old, unpaid debts, you need to understand the statute of limitations because once a debt is considered "time-barred," creditors and debt collectors can no longer legally sue you to collect payment. The statute of limitations sets the maximum period that lenders or collectors have to file a lawsuit, and after this time passes (which varies by state and debt type), the debt becomes time-barred. Written contracts, oral contracts, promissory notes, and open-ended accounts (such as credit cards) can all have different statutes of limitations.

However, under specific circumstances, the statute of limitations can restart. So, be very careful when talking to debt collectors about old debts. If you say the wrong thing, you could extend the time the creditor has to sue you for it.

Know Your Rights: Three Things to Know About Time-Barred Debts

If you have an old debt and are worried about collection attempts, here are three important rights and protections you should know before responding to calls, letters, or other communications about a time-barred debt.

• Creditors can't sue you for time-barred debts. Once the statute of limitations on a debt has expired (often 3 to 10 years under state law), collectors lose their legal right to pursue you in court for repayment. However, the debt itself doesn't disappear.
• Collectors may still call or request payment. Even after the statute of limitations expires, debt collectors can contact you and ask for voluntary repayment. They may also continue to report the debt to credit bureaus if it is within the credit reporting timeframe.
• Making a payment or acknowledging the debt could reset the clock. In many states, a partial payment, a written promise to pay, or admitting you owe a debt can restart the statute of limitations, which allows collectors to sue. So, if you have an old debt, don't respond to a collector or pay without getting legal advice.

When Does the Statute of Limitations Period Start for Debt?

The time limit for a particular statute of limitations starts to run from the time the agreement is breached. Usually, that means:

• when you stop making payments
• if insurance lapses on collateral, or
• some other significant act or omission occurs that puts the ball back in the creditor's court to enforce the agreement.

How State Laws Affect Credit Card, Personal Loan, and Medical Debt Statutes of Limitations

The amount of time a creditor has to sue you depends on the type of debt you have and your state's laws.

Written Contract Debt: What Counts and What Doesn't?

Many states categorize the following as "written contracts" for the purpose of the statute of limitations:

• promissory notes
• credit card agreements (with exceptions), or
• other written loan agreements.

Whatever your state's law sets as a statute of limitations for written contracts will usually apply to a written credit agreement with your creditor.

Oral Contract Debt: How Statutory Timeframes Differ

If you made a promise to pay but didn't put it in writing, or if a creditor claims that you owe money based on an oral agreement, then most states will apply a different statute of limitations.

The statutes of limitations for oral agreements are either shorter than the time limit for written contracts (most states) or the same time limit (other states).

Open-End Account Debt (Credit Cards)

Some states distinguish credit cards from standard "written contracts" and instead classify them as open-ended or revolving accounts. In those cases, the statute of limitations might be different, usually shorter than the time limits for written contracts.

However, some states give creditors (especially credit card companies) the option of treating the credit account as a written contract, thus extending the statute of limitations even further.

Installment Loans and Retail Contracts

A different statute of limitations might apply if you enter into an installment payment agreement directly with a retailer. A retail installment agreement is different from a credit card in that the creditor is the store that sold you the goods, as opposed to a third-party bank financing your purchase.

You pay the purchase price directly to the seller over time. Usually, the statute of limitations, if applicable, is much shorter than the time limit for written contracts.

Mortgage Foreclosure Deadlines

The statute of limitations for foreclosure might be different than the period for other written contracts.

How to Find the Statute of Limitations by State

State law sets the statutes of limitations. They usually range from about three to ten years, depending on the type of debt.

To find out the statute of limitations for debts in your state, you can:

• check Nolo's 50-state chart
• consult a lawyer, or
• research your state laws by going to a local law library, contacting your state consumer protection agency, or doing legal research on the internet.

What Debt Collectors Can—and—Can't Do After the Statute of Limitations Expires

Aggressive debt collectors sometimes try to enforce debts even when the statute of limitations has passed. They buy these debts from original creditors on the cheap, so they make a profit if they collect anything.

A Creditor Might Sue You Even After the Statute of Limitations Period Has Run

Just because the statute of limitations has expired doesn't mean a creditor or collector won't sue you. They might file a collection lawsuit after the limitations period has passed, hoping you won't notice that the statute of limitations has expired and won't raise it as a defense to the suit.

You'll have to raise the statute of limitations as a defense if you get sued. If you don't, the creditor may be able to get a judgment against you on an otherwise unenforceable debt.

Also, be aware that an expired statute of limitations usually doesn't eliminate the debt; it merely limits the judicial remedies available to the creditor or collection agency after a specific time. A debt collector may still seek voluntary payment of an old debt even though they can't use a lawsuit to force you to pay it.

A Collector Might Use Other Aggressive Tactics

Some debt buyers use aggressive tactics when trying to collect time-barred debts. They harass debtors and might even try to trick debtors into reaffirming debts so that the statute of limitations begins anew. These tactics often violate the federal Fair Debt Collection Practices Act (FDCPA).

Responding to Debt Collection Calls and Letters