What Is The Statute Of Limitations On Debt? (2024)

When you’re coping with overdue debt, you may read or hear about something called the “statute of limitations.” This legal lingo refers to the window of time a creditor or debt collector has to file a lawsuit against you to recover a past-due debt. If you owe any past-due debt, it can be beneficial to know about the statute of limitations.

What Is the Statute of Limitations on Debt?

The statute of limitations is the period of time when a creditor or debt collector can file a lawsuit against you to recoup the money you owe. This debt may include credit cards, mortgages, auto loans, medical bills and student loans.

But even if the statute of limitations expires, the debt may not disappear altogether, depending on state law. Whether a debt can still be collected by means other than a lawsuit varies by state.

How Long Does the Statute of Limitations on Debt Last?

The statute of limitations on debt typically falls within three to six years, although some periods are as long as 15 years. This period can vary based on where you live and what type of debt is involved.

In some states, the statute of limitations clock starts ticking when you fail to make a scheduled payment on a debt. Elsewhere, that clock may start at the point when you made your most recent payment. Some states may require that the clock restart when even a partial payment on the debt is made.

In addition, factors such as whether a debt agreement is written or oral can affect the statute of limitations period.

What Is the Debt Statute of Limitations in My State?

The statute of limitations varies from state to state. Contact your state attorney general’s office to determine the statute of limitations rules where you live. Here’s a sample of statute of limitations periods in five states:

• California: Typically four years
• New York: Three years
• Pennsylvania: Generally, four years
• Texas: Four years
• Washington: Six years

What Does It Mean When Debt Is ‘Time-Barred’?

Once the statute of limitations window closes, your overdue debt becomes “time-barred.”

If your debt is time-barred, a debt collector cannot take you to court to collect the money because this would break the law. If you are hit with a lawsuit regarding time-barred debt, inform the court that the statute of limitations has expired.

Keep in mind that, in some states, a debt collector may be able to contact you about time-barred debt. In other states, this may be prohibited by law.

If being contacted about time-barred debt is permitted in your state, you can’t be sued or threatened with a lawsuit over time-barred debt. The debt collector can, however, reach out to you by phone, email, text message or letter in an effort to recover the money you owe. In this situation, you can send a letter to the debt collector asking that they halt this contact.

Under a rule change enacted in 2020 by the Consumer Financial Protection Bureau (CFPB), consumers have the right to set limits on the debt collectors are allowed to communicate. Debt collectors who communicate electronically via text, for example, must offer consumers a reasonable and simple method to opt out of texts by providing collectors with an alternate email address or phone number.

The National Consumer Law Center notes that time-barred debt often is in the hands of a debt collector, not the original creditor (like a credit card issuer). This debt may have been sold and resold several times, bouncing from one collection agency to another.

What To Do if You’re Sued Over Time-Barred Debt

Don’t simply hope that the lawsuit will go away. Instead, look into getting help from an attorney. Even if you don’t hire a lawyer, be sure to appear in court on the date set by the judge, and tell the court that the debt is time-barred. Don’t forget to bring any proof that the debt is time-barred.

“Even if the statute of limitations has expired, a court may still award a judgment against you if you don’t show up and raise the statute of limitations as a defense,” according to the CFPB. “Ordinarily, it is the responsibility of the person being sued to point out that the statute of limitations has expired.”

What Options Do You Have for Dealing With Time-Barred Debt?

You’ve got a few options for handling time-barred debt. It’s wise to chat with a lawyer before deciding which of these three paths to take.

1. Don’t Pay the Debt

While this is one of your options, it may not be the ideal option. While a debt collector can’t take you to court over a time-barred debt, it can continue to reach out to you about the debt unless you notify them by mail to stop contacting you.

2. Pay Part of the Debt

Depending on the state, if you make a partial payment on a time-barred debt or promise to make a payment, a new statute of limitations period kicks in. If this happens, a debt collector may be allowed to file a lawsuit to recover the full debt. Consider a credit counseling agency to help you build a debt management plan.

3. Pay Off the Debt

You may be able to negotiate with a debt collector to settle your debt, perhaps even paying less than the amount owed. If you do work out a payment arrangement, ask the debt collector to state in writing that this agreement wipes out the debt and releases you from any obligations related to the debt.

How To Verify Whether You Owe the Debt

Federal law dictates that a debt collector must provide certain information when contacting you about a past-due debt. This information, which can help determine whether you owe the debt, includes the name of the creditor and the amount owed. Also, the debt collector must inform you that:

• You can dispute the debt.
• If you don’t dispute the debt within 30 days, the debt is assumed to be valid.
• If you dispute the debt in writing within 30 days, the debt collector will supply verification of the debt.
• If you ask for the name and address of the original creditor within 30 days (if different from the current creditor), the debt collector will provide that information to you.

Statute of Limitations and Your Credit Report

Past-due debts typically can remain on your credit report for seven years. Federal law prohibits credit bureaus from reporting old debt (usually more than seven years old). The National Consumer Law Center says it’s a violation of federal law to tell someone that failing to pay a time-barred debt will damage or destroy the person’s credit history or credit score.

It’s worth noting that paying off an old debt may not remove it from your credit history. And if you negotiate a debt settlement, some debt collectors might report that you failed to pay the entire amount.