What is the Statute of Limitations on Debt?
The statute of limitations on debt is the period of time after which a creditor cannot sue a debtor over borrowed funds. The statutes of limitations vary by state as well as by what kind of debt you’re talking about. For instance, the statute of limitations on credit card debt may differ significantly from those on student loan debt or medical bills, from state to state and even within the same state.
What is the statute of limitations on debt?
The various state statutes of limitations on debt ensure that creditors have only a limited amount of time to sue borrowers in pursuit of the collection of a debt. For instance, in the state of California, most debts — including medical, consumer and retail installment debt — have a statute of limitations of four years. That means that once a California debt reaches four years of age, it’s considered time-barred.
When a debt is time-barred…
- Debt collectors can’t sue you in order to collect on it.
- You may still be contacted over the debt.
- The statute of limitations may reset, in some cases, if you make partial payments or acknowledge the time-barred debt, such as by sending written notice about it. That means the creditor may once more be able to sue you for the full amount, including fees and interest.
- It can still have an effect on your credit history and your ability to take out new lines of credit in the future.
Statute of limitations by state
It’s important to get familiar with your state laws and understand how the statute of limitations works in your specific scenario. Check the map below to see the statute of limitations on debt in your state:
Statute of limitations by type of debt
Credit card debt
Credit card debt is one of the most common forms of debt in the country — the household average is $5,700 per our research, according to ValuePenguin. The statute of limitations on credit card debt varies from as low as three years, in states like Louisiana and Arizona, to as long as 10 years in states like Rhode Island and West Virginia.
Private student loan debt
While there is no statute of limitations on federal student loan debt, private student loans are a different matter. The statute of limitations on private aid ranges from three years (Alaska, Mississippi) to as many as 15 years in Kentucky.
Medical debt is one of the leading causes of bankruptcy in the US. The statute of limitations on medical debt is as long as 10 years in states like Wyoming and Missouri — and 15 years in Kentucky. However, in Alaska and South Carolina, the statute of limitations on medical debt is only three years.
Auto loan debt
Auto loan debt, and other types of retail installment sales contracts, are also subject to statutes of limitations. These limits range from a single year in Iowa to six years in Mississippi (though the figure is four years in a majority of states). Keep in mind, however, that your lender may pursue other retaliatory measures, such as repossessing your vehicle, before filing a lawsuit.
A home is often the single largest purchase a consumer will ever make, and few people can manage it without taking out a mortgage. The statute of limitations on mortgage debt ranges from three years in Alaska and Mississippi to a whopping 20 years in South Carolina. However, in all likelihood, a lender would initiate foreclosure before enough time would elapse to use these limitations as a defense.
Both federal and state tax debt are subject to statutes of limitations. On the federal level, the government has 10 years to sue taxpayers in pursuit of payment. On the state level, the statues vary; for instance, in Texas the statute of limitations is three years whereas in Oregon, there is none.
How to determine if your debt is beyond the statute of limitations
1. Determine your last debt payment
Generally, the “clock” on the statute of limitations begins at the last date of account activity — which often means the last date of payment. (It’s important to note, again, that in some jurisdictions, even making a promise to pay can count as activity and restart the clock.)
You can get a free copy of your credit report from all three major credit bureaus once a year at AnnualCreditReport.com, which will show the last dates of payment on your various accounts, as well as other relevant information such as total balance.
2. Find the relevant law in your state to compare
As mentioned above, the statute of limitations on debt varies by state and by the type of debt in question. While tools, like the map above, are a good starting place, the best way to be informed about the relevant laws in your state is to look at the legislation yourself and confirm that you have the most accurate and up-to-date information about the statutes that govern your specific circumstances.
3. Get in touch with a debt collections lawyer
Given the complexity of the statutes of limitations surrounding debt, having a debt collections lawyer on your side can be a major boon if you’re facing litigation. An attorney can help ensure you don’t accidentally make any moves that could restart the clock on the statutes of limitations on your debts, as well as help you keep as much of your money as possible.
What to do if a debt collector calls you over time-barred debt
Although the statute of limitations does keep creditors from suing consumers on old debts, it doesn’t stop them from attempting to collect payments — or from reporting loan default to the consumer reporting agencies that are responsible for calculating your credit score.
Therefore, it’s important to tread carefully. If a collector calls or contacts you about a debt you think may be time-barred, or after the statute of limitations, you should ask the collector directly whether or not the debt’s statute of limitations has expired. The collector may decline to answer — but if they do, the law requires that they answer truthfully.
You can also write a letter to a debt collector demanding that they cease communication, and they are required to comply by the Fair Debt Collection Practices Act (FDCPA). If you’ve hired an attorney and inform the collector that you’ve done so, they are obligated to attempt to communicate with your legal representation before contacting you personally.
The FDCPA also prevents debt collectors from harassing or threatening you, as well as from lying or misrepresenting information. However, until a debt is past the statute of limitations, you can be sued for repayment — and if you’re sued for a time-barred debt, you still need to respond and potentially show up in court to defend yourself.
Do you have to pay off a time-barred debt?
If collectors are coming after you for a time-barred debt, you have three options. It’s advisable to consult a debt collections lawyer before deciding which is best for you.
- Don’t pay the debt. Although you can’t be successfully sued after the statute of limitations is over, collectors can still pursue you — and the debt can still have an effect on your credit.
- Pay some of the debt. However, keep in mind that in some states, making a partial payment, or even promising to pay, can restart the clock on the statute of limitations.
- Pay off the debt in full. In some cases, a collections agency may accept a sum lower than the debt total to settle your account, but you should get a signed, written document releasing you from further obligation if you go this route. Always keep records of any payments you make against any debt.