Thanks to this law, old debts can’t haunt you forever – but it won’t make the debt disappear, either.
If you don’t pay back your debts, debt collectors can pursue legal action. But once your outstanding debt has passed the statute of limitations in your state, creditors can no longer sue you. This isn’t a ‘wipe the slate clean’ deal, though. Unpaid debts can affect your credit and financial future.
What is the statute of limitations on debt?
In the most basic terms, the statute of limitations on debt is an expiration date. It applies to oral and written contracts, promissory notes (such as student loans), and open-ended accounts (like credit cards). Once a certain number of years have passed, creditors and debt collectors can no longer legally sue you for payment. At that point, the debt is “time-barred.” If a creditor files a lawsuit or threatens to do so, that’s a violation of the Fair Debt Collection Practices Act.
The time period differs between states, and typically starts on the account’s last date of activity – which is usually the date of your first missed payment.
While the statute of limitations can save you from going to court to pay an old debt, it doesn’t make the debt magically disappear. Creditors can still contact you about delinquent debt, and report it to the major consumer credit bureaus: TransUnion, Experian and Equifax. That means it will show up on your credit report for up to seven years, and may damage your credit and affect your financial standing.
If you’re struggling with debt, you can engage a debt relief company to help you to eliminate some or all of your debt.
Categories of debt
Debt falls into one of four categories. There are time limits for each type of debt, so if you’re unsure about the kind of debt you have, check with your creditor or attorney.
- Oral agreements. As the term suggests, these are debts based on a verbal contract. You agreed to pay back the money, but there’s nothing in writing.
- Written contracts. These debts must be physically written down (even if it’s on scrap paper), signed by both you and the creditor, and include the terms and conditions of the loan. A good example of a written contract is a medical debt.
- Promissory note. These are written agreements to repay a debt in certain amounts, at a certain interest rate, and by a certain date. Student loans and mortgages are common examples of promissory notes.
- Open account. Also known as open-ended accounts, these are accounts with revolving balances that you can repay and borrow again and again. Think credit cards and lines of credit.
Be mindful of restarting the statute of limitations on your debt
The statute of limitations starts on the last date of activity on the account. If you engage with the account in any way, the clock restarts – giving your creditors much more time to sue you for the debt you owe. The action can be anything from making a payment, promising to pay, or signing an agreement.
To confirm the last date of activity on the account, check your credit report or ask your creditor. It could be the last time you submitted a payment, entered a payment arrangement, or acknowledged ownership of the debt.
What is the statute of limitations on debt in my state?
The statute of limitations on debt varies between states. Depending on the type of debt you have, it’s usually between three and six years, but it’s as high as 15 in some states. Once a delinquent debt is older than the statute of limitations in your state, debt collectors no longer have the right to sue you for payment. You might still have a moral obligation cough up the money, but you can’t be taken to court.
This chart breaks down the statute of limitations on debt in each state in terms of years:
| State | Oral | Written | Promissory | Open |
|---|---|---|---|---|
| Alabama | 6 | 6 | 6 | 3 |
| Alaska | 6 | 6 | 3 | 3 |
| Arizona | 3 | 5 | 6 | 3 |
| Arkansas | 3 | 5 | 3 | 3 |
| California | 2 | 4 | 4 | 4 |
| Colorado | 6 | 6 | 6 | 6 |
| Connecticut | 3 | 6 | 6 | 3 |
| Delaware | 3 | 3 | 3 | 4 |
| D.C. | 3 | 3 | 3 | 3 |
| Florida | 4 | 5 | 5 | 4 |
| Georgia | 4 | 6 | 6 | 4, or 6 for credit cards |
| Hawaii | 6 | 6 | 6 | 6 |
| Idaho | 4 | 5 | 5 | 5 |
| Illinois | 5 | 10 | 10 | 5 |
| Indiana | 6 | 10 | 10 | 6 |
| Iowa | 5 | 10 | 5 | 5 |
| Kansas | 3 | 5 | 5 | 3 |
| Kentucky | 5 | 10 | 15 | 5 |
| Louisiana | 10 | 10 | 10 | 3 |
| Maine | 6 | 6 | 6 | 6 |
| Maryland | 3 | 3 | 6 | 3 |
| Massachusetts | 6 | 6 | 6 | 6 |
| Maryland | 6 | 6 | 6 | 6 |
| Michigan | 6 | 6 | 6 | 6 |
| Minnesota | 6 | 6 | 6 | 6 |
| Mississippi | 3 | 3 | 3 | 3 |
| Missouri | 5 | 10 | 10 | 5 |
| Montana | 5 | 8 | 8 | 5 |
| Nebraska | 4 | 5 | 5 | 4 |
| Nevada | 4 | 6 | 3 | 4 |
| New Hampshire | 3 | 3 | 6 | 3 |
| New Jersey | 6 | 6 | 6 | 6 |
| New Mexico | 4 | 6 | 6 | 4 |
| New York | 6 | 6 | 6 | 6 |
| North Carolina | 3 | 3 | 5 | 3 |
| North Dakota | 6 | 6 | 6 | 6 |
| Ohio | 15 | 6 | 15 | 6 |
| Oklahoma | 5 | 3 | 5 | 3 |
| Oregon | 6 | 6 | 6 | 6 |
| Pennsylvania | 4 | 4 | 4 | 4 |
| Rhode Island | 10 | 10 | 10 | 10 |
| South Carolina | 3 | 3 | 3 | 3 |
| South Dakota | 6 | 6 | 6 | 6 |
| Tennessee | 6 | 6 | 6 | 6 |
| Texas | 4 | 4 | 4 | 4 |
| Utah | 4 | 6 | 6 | 4 |
| Vermont | 6 | 6 | 5 | 3 |
| Virginia | 3 | 5 | 5 | 3 |
| Washington | 3 | 6 | 6 | 3 |
| West Virginia | 5 | 10 | 6 | 5 |
| Wisconsin | 6 | 6 | 10 | 6 |
| Wyoming | 8 | 10 | 10 | 8 |
What if I no longer live in the same state?
Debt collectors may still use your original state for the statute of limitations if the time limit is longer than the state you’re currently living in.
What types of debt does the statute of limitations not apply to?
- Income taxes
- Federal student loans
- Child support in most states
How can I find out if my debt has passed the statute of limitations?
Contact your creditor – but be careful about what you say. Ask them if the debt is a time-barred debt, or for the date of your first missed payment. Remember, any action you take regarding payment will restart the clock on the statute of limitations. To avoid that, don’t make a payment (even a partial one) or promise to do so.
If the statute of limitations has expired but your debt collector is still in contact, you can send them a letter requesting they stop all communication.
What does the Fair Debt Collection Practices Act have to say about the statute of limitations on debt?
This federal law protects you in more ways than one. Here’s the gist:
- Once a debt is time-barred, it’s against the law for a collector to sue or threaten to sue you. If they do, it’s in direct violation of the Fair Debt Collection Practices Act, and you have the right to file a complaint with the Federal Trade Commission (FTC) or engage an attorney. You can also file your own lawsuit.
- Debt collectors can pursue you for a debt after the statute of limitations has passed. Under the Act, they can call, send letters, and list the debt on your credit report if it’s within the credit reporting time limit. To cut off communication, you’ll need to send a written cease and desist letter.
- If you ask a debt collector if the statute of limitations has expired, the law stipulates that they don’t have to answer. But if they do, they can’t lie.
Compare debt relief options
When a debt is time-barred, it just means your creditors can’t legally force you to pay up. This may sound ideal, but an unpaid debt can affect your credit for years to come. Another option is exploring debt settlement. These debt relief companies will be able to help.
Before you sign up with a debt relief company
Debt relief companies typically charge a percentage of a customer’s debt or a monthly program fee for their services. And they aren’t always transparent about these costs or drawbacks that can negatively affect your credit score. You might pay other fees for third-party settlement services or setting up new accounts, which can leave you in a worse situation than when you signed up.
Consider alternatives before signing up with a debt relief company:
- Payment extensions. Companies you owe may be willing to extend your payment due date or put you on a longer payment plan if you ask.
- Nonprofit credit counseling. Look for free debt-management help from nonprofit organizations like the National Foundation for Credit Counseling.
- Debt settlement. If you can manage to pay a portion of the bill, offer the collection agency a one-time payment as a settlement. Collection agencies are often willing to accept a lower payment on your debt to close the account.
What reaching the statute of limitations on debt will not do
Unfortunately, reaching the statute of limitations doesn’t erase the debt. The only way to do that is to pay it, get it cancelled, or have it discharged via bankruptcy.
The statute of limitations restricts creditors from suing you in court, but it doesn’t do the following:
- Prevent creditors from filing a lawsuit against you. Collectors may try to dispute the date of the debt. They might argue that the time limit imposed by the statute of limitations doesn’t apply. If this happens, you’ll have to go to court and ask the judge to dismiss the case, using the statute of limitations as your defense. Be prepared, and bring proof that the debt has expired. Don’t ignore the summons – if you don’t show up, the court can order you to pay.
- Wipe the debt from your credit report. In most cases, unpaid debts stay on your credit report for 7 years.
- Leave your credit score unaffected. If you decide not to pay the debt you owe and send your creditor a cease and desist letter, it will hurt your credit. This may make it difficult or more expensive to apply for credit, leases and loans in the future.
Bottom line
Having debt hanging over your head can be stressful – even if it’s bounced between creditors for years. The statute of limitations on debt stops the cycle, and means that you can’t be taken to court to pay an old debt. However, it doesn’t erase the debt.
To explore your options, check out our guide to getting out of debt.
