Statutes of Limitations

Could you be working hard to pay off a debt that you no longer are obligated to pay? All traditional debts have statutes of limitations, or time limits during which a creditor may sue a debtor for repayment of a debt. If the statute of limitations on a debt has passed, you have an absolute defense against a creditor should he or she try to sue you for repayment. In other words, you no longer have to repay the debt.

Such limits on debt liability were developed, quite literally, so that consumers would not have to worry about being sued for the remainder of their lives. Statutes of limitations also allow debtors more resources with which to defend themselves should they be sued before the statute expires, rather than out of the blue fifteen years down the road.

However, it is important to understand that when a statute of limitations on a debt expires, that does not mean that the debt no longer exists. Rather, it is a situation in which you have the power to protect yourself effectively against legal liability if you are aware of your account’s status, and if you can document that the statute of limitations has run out.

The length of statutes of limitations varies by state and by type of debt. For open-ended debts - those that utilize a line of credit such as credit cards - the statute of limitations is between three to six years in most states. For all other debts, the statute of limitations is between three to ten years in most states.

No matter what the length of the statute of limitations on a debt, the clock starts ticking either from the date on which a payment on an account was due but not received, or from the date on which a creditor wrote off the balance as a “bad debt”. You can find out this date on which activity last was recorded on an account by viewing your credit report.

If the statute of limitations has begun to run on an account and the debtor makes a payment, even a partial payment in some states, the statute of limitations restarts from the beginning. Not surprisingly then, you may discover that a creditor or collections agency will try to get you to make a payment just before a statute of limitations is about to end on your account. If you succumb to the pressure and make a payment at this point, you are forfeiting your protections under the statute of limitations and are allowing yourself potentially to be sued for payment for another three to ten years.

If a creditor or collector calls you after the statute of limitations has run out on your debt, it is your responsibility to inform him or her of your account’s status. Tell him or her matter-of-factly that the statute of limitations has run out and that you no longer need to pay. He or she may try to tell you that you “cancelled” the expiration or otherwise still are liable, but stick to your guns. It could be true, but tell him or her to prove it in court.

Send the creditor or collector a certified letter stating that you do not want to be contacted again. They must cease contact once you have taken such action, even if, in fact, your debt is current. Do not pay, do not agree to pay, and do not make any type of a “deal” whatsoever in this situation.

It is true that a creditor still has the right to take you to court after the passing of a statute of limitations, but you have an absolute defense in this fact so long as you are aware and have documentation. Therefore it is important for you to be up-to-date on the status of your accounts, and to be able to provide evidence of dates. If you fail to show that a debt is past the statute of limitations, a judgment may be made against you.

Remember that the statute of limitations refers only to the time period during which a creditor or collector may sue you for payment. Your debt still may be listed on your credit report when the statute of limitations has passed, as the two time limits are unrelated. This is a common source of confusion for consumers.

While statutes of limitations can be a breath of fresh air for the debtor who has gotten in over his or her head, none of this should be taken to mean that is a good or responsible idea to ignore your financial obligations. Creditors can sue you any point for repayment, and if the statute of limitations on your debt is no where near expiration, the benefits of paying almost certainly are much greater than that of riding out the debt and taking your chances with legal repercussions. A financial professional can help you to navigate the best course of action for your individual debt situation.

Benefiting from statutes of limitations may sound daunting, but remember that they exist to help you – the consumer. By staying informed on the status of your accounts, by standing firm in your rights in the face of creditors and collectors, and by taking advantage of the opportunities provided by statutes of limitations, you can save yourself from making unnecessary payments.

STATE	ORAL agreements	PROMISSORY agreements	OPEN accounts	WRITTEN agreements
Alabama	6	6	3	6
Alaska	6	6	6	6
Arizona	3	5	3	6
Arkansas	3	6	3	5
California	2	4	4	4
Colorado	6	6	6	6
Connecticut	3	6	6	6
Delaware	3	6	3	3
District of Columbia	3	3	3	3
Florida	4	5	4	5
Georgia	4	6	4	6
Hawaii	6	6	6	6
Idaho	4	10	4	5
Illinois	5	6	5	10
Indiana	6	10	6	10
Iowa	5	5	5	10
Kansas	3	5	3	5
Kentucky	5	15	5	15
Louisiana	10	10	3	10
Maine	6	6	6	6
Maryland	3	6	3	3
Massachusetts	6	6	6	6
Michigan	6	6	6	6
Minnesota	6	6	6	6
Mississippi	3	3	3	3
Missouri	5	10	5	10
Montana	5	8	5	8
Nebraska	4	6	4	5
Nevada	4	3	4	6
New Hampshire	3	6	3	3
New Jersey	6	6	6	6
New Mexico	4	6	4	6
New York	6	6	6	6
North Carolina	3	5	3	3
North Dakota	6	6	6	6
Ohio	6	15	4	15
Oklahoma	3	5	3	5
Oregon	6	6	6	6
Pennsylvania	4	4	4	4
Rhode Island	15	10	10	15
South Carolina	10	3	3	10
South Dakota	6	6	6	6
Tennessee	6	6	6	6
Texas	4	4	4	4
Utah	4	6	4	6
Vermont	6	5	6	6
Virginia	3	6	3	5
Washington	3	6	3	6
West Virginia	5	6	5	10
Wisconsin	6	10	6	6
Wyoming	8	10	8	10