The Statute of Limitations on Debt

Make sure you know the rules of how to deal with long-term debt

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The statute of limitations. You’ve most likely heard the term before, but you may not know exactly what it means or how it affects you in a situation where you owe a debt. Well, here’s a quick rundown of what it means and how it impacts you during a debt collection.

The statute of limitations refers to the amount of time that a debt collector or creditor can obtain a court judgment to force you to pay a debt. Once the time has expired, a debt collector cannot win a lawsuit against you if you can prove the statute of limitations for your debt has passed. The statute of limitations varies from state to state and according to the type of debt you have, but it can be anywhere from two to 15 years. Generally, if you move to a different state, the state where you currently reside is where the statute of limitations will apply. According to the Federal Trade Commission, debts that have passed the statute of limitations are called time-barred debts. These debts are so old that they are past the point that a debt collector can sue you. And under the Fair Debt Collection Practices Act, a debt collector is not allowed to sue you or threaten to sue you for a debt that is time-barred.

Be aware that debts like student loans and taxes have no legal limitations on collection. Also know that the statute of limitations does not erase your debt, it just means that you cannot be forced by a court to pay it. Credit information website, Credit Infocenter, has a state-by-state list of the statute of limitations. You should also check with the attorney general’s office for  your state to double-check if your debt meets the statute of limitations.

A side note: If a collector calls you about a time-barred debt and you acknowledge that you owe the debt, you could unintentionally re-start the statute of limitations. In this case, you can be sued. In part II, we’ll explain what you should do if a debt collector contacts you after the statute of limitations on your debt has passed.

Part 2.

Sheiresa Ngo is the multimedia content producer for consumer affairs at Black Enterprise.

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  • David Paul

    Tis is not entirely correct.

    The Supreme Court has ruled that statute of limitations is a recognizable defense. So upon being sued unless the debtor raises the fact the statue of limitations has run out in their answer the creditor can receive judgment or where the debtor fails to respond default judgment.

    • Yes, it was mentioned in the second paragraph that a debtor must prove the statute of limitations has passed.

  • tonya

    Any advice for my 19 year old son who was issued a credit card limit of $300. used it but lost his jobs and has not been working and has not made but maybe one payment. They are now taking him to court for nonpayment. Should he show up? He still wont have the money requested plus they are going to tack on court fees.

    • dan

      if he doesn’t show up he automatically loses. google “going to court for debt but can’t afford it”

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  • Mike

    The latest scam from debt collectors is
    to settle an old debt for a small amount. They pay pennies on the dollar for this distressed debt

    Then they issue a 1099c called debt forgiveness,but it is never disclosed in the settlement talks
    Why should you pay the tax on this? and do you have to?
    If they do not disclose what they pay for this distressed debt?

  • So what I am saying is this
    First the debt was sold at a huge discount, and they will not tell you the amount
    Second, why a 1099c for the so-called forgiveness, they settled for the settled amount
    with no mention of a 1099c coming.
    This might be a can or worms or the coming of a class action law suit?
    Who knows I wish someone could answer this. The banks made out like bandits
    why does the consumer always lose? The Dodd Frank bill is nothing for the citizens

    The website above is the next hurdle from the banks
    click to find out below
    Here we go again. True to form, the government is exercising classic overreach in its attempts to regulate the financial markets, this time trying to “fix” something that is clearly not broken.

  • Kathy

    My son was contacted by a VA university regarding an unpaid student account. A 529 account check was provided in Jan. 2006 and credited to his account. In May 2010, the university determined the check didn’t clear and billed him for the amount of $1800 in Aug 2010. There were no prior notices or attempts to notify him of this issue. The university has never provided information on the length of time the check was held. We live in MD. Which statue of limitation is applicable? Would this type of payment be a written contract or promissory note?

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