Time-Barred Debts: When Creditors and Collectors Cannot Sue You for Unpaid Debts

If you have old, unpaid debts, you might be safe from lawsuits to collect them. Creditors and debt collectors have a limited number of years to sue you for outstanding debts. This time limit is called the "statute of limitations." The time allowed varies greatly from state to state and for different kinds of debts; written contracts, oral contracts, promissory notes, and open-ended accounts (like credit cards) can all have different statutes of limitations.

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.

Finding the Applicable Statute of Limitations

State law sets the statutes of limitations. They usually range from about three to ten years and depend on the type of debt. To find out the statute of limitations for debts in your state, you can:

• check out 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 some legal research on the Internet.

Using the Statute of Limitations as a Defense to a Lawsuit

If a creditor waits too long to sue you, you must raise this as a defense in the papers you file in response to the lawsuit. If you can prove that the statute of limitations period has passed, then you won't have to pay the debt. If the debt collector knows that the statute of limitations has expired on the debt and still sues you, it might have violated the federal Fair Debt Collection Practices Act (FDCPA).

But a statute of limitations doesn't eliminate the debt; it merely limits the judicial remedies available to the creditor or collection agency after a specific amount of time. A debt collector may still seek voluntary payment of an old debt even though the law can't force you to pay it.

Some Debt Collectors Try to Enforce Time-Barred Debts

Aggressive debt collectors sometimes try to enforce debts that are barred by the statute of limitations. They buy these debts from original creditors for pennies on the dollar, so they make a tidy profit when they collect anything.

Some of these debt buyers use aggressive tactics when they try to collect on time-barred debts. According to media reports, they abuse and harass debtors and try to trick debtors into reaffirming debts so that the statute of limitations begins anew.

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