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Statute Of Limitations On Debt Collection

Statute Of Limitations On Debt Collection

When a borrower fails to repay a debt, it gets handed over to a collection agency by the original lender. However, on subsequent non-payments the debt account may move from one collector to another.

Statute of limitations is a sort of expiration date that prevents the original lender and other debt collectors from pursuing a debt indefinitely.

Statute of Limitations Definition:

The amount of time one can take in order to take a legal action on a certain event is the statute of limitations definition. In terms of debt collection, it refers to the amount of time a creditor has to ask the court to force a borrower to pay for a debt.

It is your responsibility to prove to the court that a debt has passed the statute of limitation. It may be in your best interests to not pay old debts on which the statute of limitations has expired.

The statute of limitations starts on the day when the account was last active, which can be different from the date the account went past due. You can find the account’s last day of activity from your credit report. Make sure that you never take an action on any old account. The statute of limitations is restarted the moment you take action.

The statute of limitations can be restarted by making a promise of payment, entering a payment agreement, making a part payment, or making a charge with the account.

Time Barred Meaning:

Debts with expired statute of limitations are known as time-barred debts. This does not mean that you do not owe money. So what is time barred meaning? Basically, it means a creditor can easily file a lawsuit against you. In fact, you will find more than a few debt collectors attempting to collect, even when the statute of limitations has expired.

They may go as far as filing a lawsuit against you, in the hopes that you don’t know about statute of limitations, and will pay up with enough intimidation and pressure.

You can use the statute of limitations as justification to not pay an old debt, if you are sure that it has expired. A creditor will be unable to get a judgment against you as long as you prove to the court that your debt is too old.

Proof can include your own records of communication that you have made about the debt or personal check showing the last time you made payment.

Various Types of Debt

Time limits are different for various types of debt. It is critical to know each category of debts for this reason. These are the four categories of debt:

Written Contracts

These include all those debts that were signed by you and the creditor. A debt will be considered as a written contract even if it was written and signed on a paper napkin as long as it includes the terms and conditions of the loan. For instance, a medical debt stating the amount of loan and monthly payment is a type of written contract.

Oral Agreements

In these debts, there is nothing in writing and the borrower verbally promises to pay back the money.

Open-Ended Account

These accounts have revolving balances where you pay and then borrow again. It is not an open-ended account if you can only borrow money once under the loan agreement. Few examples of this category of debt are lines of credit, in-store credit, and credit cards.

Promissory Notes

These are written agreements to pay back a debt by certain date and time, in certain payments, at a certain interest rate. Student loans and mortgages are examples of promissory notes.

Statute of Limitations Summary

Each state has its own specified limits on the amount of time a court can force you to pay a debt. These limits called the statute of limitations vary according to the type of debt you have. Generally, the statute of limitations is between 3 to 6 years for most states, but can be as high as 10 or 15 years as well.

Make sure you find out the debt statute of limitations for your state before responding to an old debt collection. Here is a rundown of the statutes of limitations for some major states.


California statute of limitations is one of the shortest statute of limitations in the country. The statute of limitations is two years for oral contracts and four years for all other categories. This means that lenders cannot pursue common unsecured debts like credit cards beyond 4 years.


The Florida statute of limitations varies for different kinds of debt in the state. It is 5 years for written contracts such as personal loans. The same holds true for promissory notes as well. The statute is shorter for other kinds of debt such as oral agreements and open-ended accounts.


Michigan has standard statutes of limitations of 6 years that applies to all types of debts. This means that creditors cannot take legal action if a debt is more than 6 years overdue. This includes credit cards, one-time loans and any other type of debt.

New Jersey

New Jersey, which is the most corrupt state in the country, has a 6 years statute of limitations on all kinds of loans from credit cards to written contracts. A lender cannot take action to collect a debt in New Jersey if there has been no action on a debt collection account for more than 6 years.

New York

New York has a 6 years statute of limitations for all kinds of debt. A creditor cannot sue for any debt including personal loans and credit cards bills that are older than 6 years. The time period is counted from when a debtor made a payment or when the debt became due, whichever is more recent.


The statute of limitations in Ohio is similar to that of New York. It is standard 6 years for all kinds of debt.

A creditor cannot sue for debt collection purposes on any debt that is older than 6 years. However, it is the borrower’s responsibility to prove in court that the statute of limitations has expired on the debt.

Vital Facts

The statute of limitations can be a powerful legal tool, if you know your rights. It is important that you do not confuse it with credit reporting time limit. The statute of limitations cannot prevent a creditor from filing a lawsuit against you. However, it can work to prevent a collector from winning a judgment against you.

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