Statute of Limitations for Debt Collectors

Bryan Huynh

March 20, 2024 Credit Builder Loans

Key Takeaways

Learn about the statute of limitations on debt collection and how it affects individuals dealing with debt collectors. The statute of limitations, which varies by state and type of debt, limits the time during which legal action can be taken against debtors. This period restricts the legal enforcement of debt, it does not stop debt collectors from reporting unpaid debts to credit bureaus or contacting debtors even after the statute has expired. However, debt collectors cannot threaten or take legal action once this period has passed.
Explore the differences in the statute of limitations across various states and for different types of debts such as oral contracts, written contracts, promissory notes, and open-ended accounts like credit cards.
Learn about the impact of unpaid debts on credit scores and provides strategies for proactive debt management, including careful communication with collectors and understanding the implications of acknowledging or making payments on old debts.

Statute of Limitations for Debt Collectors

I. Introduction

No one wants to deal with debt collectors. Not only are they trying to get you to pay back money you usually don’t have, but they’re also often harassing and even threatening. They can be very aggressive with their calls and it can make it so you don’t ever want to pick up the phone, answer the door, or check your email again. Most of the time, debt collectors will use threats of legal action to get you to pay your debt. You may be threatened with lawsuits, having your assets seized, your wages garnished, or other serious issues.

If this sounds like your situation, you may feel like you’re going to be hounded about your debts for the rest of your life. If you’re dealing with debt collectors right now, or if you’re worried about old debts coming back to haunt you, you probably want to know if there is a statute of limitations for debt collectors. And the answer is: Yes. There is a statute of limitations for debt collectors..

Understanding the laws and regulations around debt collection will help you better handle the process and reduce the stress and anxiety you might be feeling.

II. The Statute of Limitations Explained

Creditors don’t have an unlimited time to take legal action against you for your debts. Depending on the state you live in and the type of debt being collected, there are laws in place to prevent this. This length of time is called the statute of limitations. Once this time runs out, creditors can no longer take legal action against you or threaten to take legal action against you for a debt.

However, it is important to note that there is a difference between the statute of limitations on filing lawsuits and reporting to debt credit bureaus. Debts generally do not disappear until they are paid or some other arrangement has been made. They remain on your credit report for seven years and debt collectors can report debts to credit reporting agencies outside the period set by the statute of limitations. This means that even after the statute of limitations for legal action has passed, you can still be hurt by old debts. Debt collectors may use this fact to pressure you into payment.

Also, in some states, debt collectors can continue to contact you once the statute of limitations has expired. They just cannot threaten or use legal action.

III. State-by-State Breakdown

Each state has its own statute of limitations for different types of debt. Understanding the laws around debt collection in your state is important as it can help you plan for how to act when it comes to debt and threats by debt collectors.

1. Overview of Variations by State

The following table details the statute of limitations for different types of debt across states.

State	Oral Contract	Written Contract	Promissory Note	Open Accounts
Alabama	6 years	6 years	6 years	3 years
Alaska	6 years	6 years	3 years	3 years
Arizona	3 years	6 years	5 years	3 years
Arkansas	3 years	5 years	5 years	3 years
California	2 years	4 years	4 years	4 years
Colorado	6 years	6 years	6 years	3 years
Connecticut	3 years	6 years	6 years	3 years
Delaware	3 years	3 years	3 years	4 years
Florida	4 years	5 years	5 years	4 years
Georgia	4 years	6 years	6 years	4 years
Hawaii	6 years	6 years	6 years	6 years
Idaho	4 years	5 years	5 years	4 years
Illinois	5 years	10 years	10 years	5 years
Indiana	6 years	10 years	10 years	6 years
Iowa	5 years	10 years	5 years	5 years
Kansas	3 years	5 years	5 years	3 years
Kentucky	5 years	15 years	15 years	5 years
Louisiana	10 years	10 years	5 years	3 years
Maine	6 years	6 years	6 years	6 years
Maryland	3 years	3 years	6 years	3 years
Massachusetts	6 years	6 years	6 years	6 years
Michigan	6 years	6 years	6 years	6 years
Minnesota	6 years	6 years	6 years	6 years
Mississippi	3 years	3 years	3 years	3 years
Missouri	5 years	10 years	10 years	5 years
Montana	5 years	8 years	8 years	5 years
Nebraska	4 years	5 years	5 years	4 years
Nevada	4 years	6 years	3 years	4 years
New Hampshire	3 years	3 years	6 years	3 years
New Jersey	6 years	6 years	6 years	6 years
New Mexico	4 years	6 years	6 years	4 years
New York	6 years	6 years	6 years	6 years
North Carolina	3 years	3 years	5 years	3 years
North Dakota	6 years	6 years	6 years	6 years
Ohio	6 years	8 years	6 years	6 years
Oklahoma	3 years	5 years	5 years	5 years
Oregon	6 years	6 years	6 years	6 years
Pennsylvania	4 years	4 years	4 years	4 years
Rhode Island	10 years	10 years	10 years	4 years
South Carolina	3 years	3 years	3 years	3 years
South Dakota	6 years	6 years	6 years	6 years
Tennessee	6 years	6 years	6 years	6 years
Texas	4 years	4 years	4 years	4 years
Utah	4 years	6 years	6 years	4 years
Vermont	6 years	6 years	5 years	3 years
Virginia	3 years	5 years	6 years	3 years
Washington	3 years	6 years	6 years	3 years
West Virginia	5 years	10 years	6 years	5 years
Wisconsin	6 years	6 years	10 years	6 years
Wyoming	8 years	10 years	10 years	8 years

2. Highlighting Notable State Differences

While all states are different, there are some in which the differences in statutes of limitations are particularly notable.

For instance, Illinois, Indiana, Iowa, Louisiana, Missouri, Rhode Island, West Virginia, Wisconsin, and Wyoming have statutes of limitations of up to ten years for certain types of debt. This is longer than the period in which a debt remains on your credit report and longer than any other state.

On the other hand, California has only a two-year statute of limitations on oral contracts while many other states have three-year limits in place for various debts.

It is also important to note that, in some states, the statute of limitations begins once a required payment is missed, while other states start the clock from when the most recent payment was made. Looking into your state laws can help you here.

IV. Types of Debts and Their Limitations

In addition to differences between states, there are also differences when it comes to various types of debt.

1. Oral Contracts

An oral contract is outlined and agreed to via spoken communication. It is not written down. In most states, the typical statute of limitations is shorter for oral contracts than other types of debt.

2. Written Contracts

Written contracts are agreements that are made and put into writing. In most states, the length of time that creditors have to take legal action against you for a written debt is longer than oral contracts.

3. Promissory Notes

A promissory note is a written promise to repay a sum in exchange for a loan or other financing. This note includes all the details of the loan, such as the sum borrowed, the payment schedule, and how interest will be charged.

A promissory note is different from a written contract.

Promissory notes are usually used for business or personal loans, car loans, mortgages, and student loans. Other written contracts like loan agreements tend to be more comprehensive, fully binding, and legally enforceable. In some states, the statute of limitations for a promissory note is shorter than a written contract, but in most states, the lengths are the same.

4. Open-Ended Accounts (e.g., Credit Cards)

Open-end credit is not restricted to a particular use. For instance, a credit card or line of credit can be used for essentially any purpose, while a mortgage or car loan is tied to specific circumstances. Open-ended accounts do not typically have an end date. You can borrow and repay for an unlimited amount of time as long as you are in good standing and stay under your credit limit.

In most states, the length of time that creditors can come after you with legal action is shorter for open-ended accounts than for written contracts. This is not true across the country. In some states, such as Hawaii and Iowa, the length of time is the same.

V. Actions That Can Reset the Clock

One of the most important things to know about the statute of limitations for debt collectors is that certain actions you take can restart the clock. Acknowledging a debt is an example of how you can restart the time that creditors have to take legal action against you. If you say that you agree the debt is yours and/or agree to pay, this could start the clock all over again.

Making a payment or partial payment can give you more time as well, as can making a charge to your old credit card.

If you restart the clock, it restarts from the beginning. So if your state gives creditors five years to take legal action on a debt, restarting it gives them five more years. This is often why creditors and debt collectors are so aggressive. They want you to restart the clock and give them more time to go after you.

VI. Legal and Financial Expert Perspectives

1. Expert Analysis

One of the most important things to know about the statute of limitations for debt collectors is that each state has its own laws. Understanding the details that apply to your state can help you decide how to proceed with your debt. It’s also worth noting that moving to a new state may reset the time permitted, depending on the state.

Contacting your state attorney general’s office can help you understand the details and nuances of the statute of limitations in your area.

2. Financial Advisor Commentary

If you have an old debt, you may be tempted to wait until the statute of limitations runs out and free yourself from the threat of legal action. While this may work depending on your situation, it’s important to also consider your credit score when making any financial decision.

Your credit score is important if you wish to apply for new credit (such as a mortgage or auto loan) but it can also affect your ability to rent a home or even get certain jobs. Not paying your debt will seriously hurt your credit score. If you currently have good credit, leaving a debt unpaid and having it reported to debt collectors will make that score plummet. Therefore, it’s important to consider your specific financial situation before you take any action (or lack of action) on your debts.

VII. Debtor Rights and Protection

The Fair Debt Collection Practices Act (FDCPA) is a federal law that outlines the ways third-party debt collectors can contact debtors. This includes:

How often they can contact a debtor about a debt.
Who they are allowed to contact.
The time of day they can make contact.
The language they may use.

For instance, debt collectors are not able to contact debtors at inconvenient times. This generally means before 8am or after 9pm local time. If the debtor asks the collector to call them back outside of these times, this contact is permitted.

Another rule outlined in the law involves how often they may make contact. In general, they may not call more than seven times in a seven-day period. They can message or email more frequently.

Debt collectors are also prohibited from using obscene or threatening language or threats of violence or harm. They must also clearly identify themselves as a debt collector when contacting you and cannot make misrepresentations about themselves or the debt they are trying to collect.

If a debt collector violates this law, you can submit a complaint with the Consumer Financial Protection Bureau (CFPB) or take the debt collector to court. It is important to keep detailed records of all communications with debt collectors, so you have proof to back up any claims that they are violating your rights.

VIII. Navigating Debt Collection with an Expired Statute

Depending on the laws of your state, there are instances where debt collectors will still attempt to collect even after the statute of limitations has expired. This can be frustrating to deal with, but there are some strategies you can use if this happens to you.

1. Dealing with Collectors After the Statute Expires

While they cannot take legal action against you or threaten legal action after the statute of limitations has expired, debt collectors may still contact you. Remember, if you acknowledge the debt or make a partial payment, the time limit starts again.

2. Legal Recourse for Unlawful Collection Attempts

If a debt collector violates the statute of limitations, you should report them to your state attorney general’s office, the Federal Trade Commission, or the Consumer Financial Protection Bureau.

You may also have the option to sue the debt collector. This legal action may take place in state or federal court. If you can prove damages (such as lost wages, etc.) you may be able to sue for those damages. Even if you cannot prove damages, you may be awarded up to $1,000 by the judge and have your legal costs covered. It is important that you file this lawsuit within one year of the law being broken.

Your state may have its own laws for debt collection. Contacting your state attorney general’s office can help you determine your rights.

IX. The Impact of the Statute on Credit Reporting

Not paying your debts will have a significant negative affect on your credit score. Unpaid debts will remain on your credit report for seven years. Even if the statute of limitations for legal action has passed in your state, your credit could still be damaged.

Once a debt collector has spoken with you about your debt, or mailed you a letter or electronic message about your debt and waited 14 days, they are able to report your debt to a credit reporting company. This is true even if the statute of limitations for legal action has run out.

X. Proactive Debt Management Strategies

If you have unpaid debts and are being contacted by creditors or debt collection agencies, you should handle this situation carefully. Always use caution when speaking with a debt collector as they are keeping records of everything you say. You should also keep your own records of every interaction.

If you are able to pay the debt, you may wish to. The collection agency might be willing to agree to a payment plan or even a reduced amount. If this happens, make sure you get this in writing before you make any payments.

If you are contacted about a time-barred debt (one where the statute of limitations window has closed), you have three options:

You can pay the debt in full.
You can not pay any part of the debt.
You can pay some of the debt.

Not paying the debt can have consequences in terms of your credit score as well as future calls from the collection agency. If you choose to go this route, it’s vital that you understand the situation and the potential consequences fully.

If you partially pay the debt, know that this will likely restart the time limit available for the debt collector to take legal action against you. They will likely do this to recover the remaining outstanding debt.

If you pay the debt in full or work out an arrangement, make sure you get all details in writing and ensure that the agreement you make releases you from any further obligations related to the debt.

XI. Conclusion

Debt collectors cannot come after you and threaten legal action forever. Each state has its own laws regarding debt collection and a statute of limitations in place that covers these situations.

Different types of debt have different time limits and periods where legal action can be taken. Understanding these laws, and what debt collectors can and cannot do, is important. Knowing your rights can protect you from unlawful actions.

About The Author

Bryan Huynh

Product Tester & Writer

Bryan Huynh, a committed Product Tester and Writer, ensures that you are well-informed, guiding you in discovering and comparing top-rated financial services, including personal loans, business loans, credit repair, and tax relief.

Articles by Bryan Huynh

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