Understanding the Statute of Limitations on Debt

The statute of limitations on debt is a law that sets a time limit on how long creditors or debt collectors can sue you to recover a debt. This time limit varies depending on the type of debt and the state you live in.

Key Points

• The Statute of Limitations on Debt is a time limit on how long creditors or collectors can sue for debt recovery, typically ranging from three to six years, but varies by state and type of debt.
• Creditors might continue to contact you after the debt is time-barred.
• Judgments are separate from time-barred issues and could last twenty years or more.
• DON’T pay debt after the statute of limitations has expired.
• Creditors are required by law to provide proof of debt ownership.
• AI has substantially increased the amount of fraud in debt collection.
• If served with a lawsuit, even if the debt is time-barred, don’t ignore the lawsuit.

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For most debts, it typically ranges from three to six years, but it can be longer in some states. It also might depend on whether you obtained the debt verbally, such as calling the lender and applying for credit, versus a written application.

After the statute of limitations expires, the debt is considered “time-barred,” meaning a debt collector generally cannot successfully sue you for it.  So, why are creditors still calling you many years after you stopped paying the debt? Here are a few reasons:

The original creditor may have sold the debt to a debt collection agency. These companies often purchase old debts for very little and try to collect whatever they can, regardless of the statute of limitations. This could be a major problem, which I’ll discuss in a moment. 

Some debt collectors may try to collect on time-barred debt, hoping that you are unaware of the statute of limitations and will voluntarily pay. If you do guess what? The statute of limitations starts up again because it’s usually based on the date of your last payment. So that payment acts as a waiver.

Also, the statute of limitations is separate from collecting on a judgment. A judgment means a court order has been issued confirming you owe the debt. But the statute of limitations to collect on the debt via a judgment is typically up to 20 years. Many times, judgments can be renewed.

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So, as long as the lawsuit was filed before the expiration of the statute of limitations and a judgment was obtained in favor of the creditor, then the judgment can hang around for decades. The important date to consider is when the lawsuit was filed, not when the judgment was obtained. The judgment can be obtained after the expiration of the statute of limitations.

Therefore, confirm the date of filing and compare it to the date your last payment was made to figure out the date of the statute of limitations.

What to Do When Receiving Creditor Calls After the Statute of Limitations Has Expired

First, especially considering how much fraud is happening, request that the debt collector provide proof they own the debt. Of course, sometimes they refuse to do so, which is a violation of the Fair Debt Collection Practices Act. But the reality is they would have to provide proof anyway if a lawsuit is filed.

I do want to point out that with Artificial Intelligence (AI), the amount of fraud has increased. I’ve read reports of foreign speakers using AI to change their language to English to seem more legitimate. On a separate note, I’ve even read about job interviews being done remotely, and the person on the other end is using an AI image. These are hackers trying to find an easy way into the system.

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We are only at the beginning stages of AI, so you can imagine what this will be like in the next few years. So always be careful what information you provide.

The debt collector also has to provide the original creditor’s name, the amount owed, and when the debt was incurred. Make sure you confirm the date of the last payment and don’t make any payments as mentioned previously, as you might affect the statute of limitations, meaning it starts all over again. This includes debt collectors who like to make deceiving statements, such as making a partial payment is an act of good faith, and they won’t contact you for a few months.

What to Do if a Lawsuit is Filed

Sometimes lawsuits are filed even after the statute of limitations. If that happens, you cannot ignore the lawsuit. Otherwise, the court will grant everything listed in the lawsuit to the creditor or debt collector.

Sometimes these lawsuits are filed as a way to force a debtor into making payments. Arguing that the statute of limitations has expired is a defense to get the case dismissed. So it’s not something that the court is going to do for you automatically, even if the court knows the statute of limitations has expired. That obligation falls on you.

So, if there is a lawsuit filed after the statute of limitations, then you have to proceed to file the appropriate motions to have the case dismissed. Note that many times I see pro se parties file the motion, then complain to me that the judge is ignoring them. Filing the motion isn’t sufficient. You have to schedule your motion for a hearing.

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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.