What is the statute of limitations on debt?

It’s never a good feeling when a debt collector calls — especially if you’re not even sure you owe anything. If you’ve been contacted by a collector looking for payment from something that fell into collections years ago, it’s a good idea to brush up on the statute of limitations for debt in your state.

Debt collectors don’t have forever to take you to court over old debts. Depending on what type of debt you have and where you live, they usually have between three to six years to file a lawsuit. After the statute of limitations ends, they can’t legally sue you for the debt. 

But just because they can’t sue, it doesn’t mean you’re off the hook. Creditors are within their rights to try to collect the debt outside the court system as long as they don’t break the law. Understanding the legal timelines and the potential impact on your credit can help you decide how to handle that lingering debt. 

What is the statute of limitations on debt?

The statute of limitations on debt is the time debt collectors have to sue you for payment on old debts. Once the statute of limitations expires, collectors can’t win a court order for repayment. This is known as the debt becoming time-barred. 

Once a debt is time-barred, creditors and collectors cannot place a property lien against your home or garnish your wages for payment. What they can do, however, is continue to contact you and ask you to repay. Depending on the state in which you live, they may also still have the right to call you or send you letters.

Potential impact on your credit score

The statute of limitations only applies to your legal responsibility. You still owe debts you’ve accrued, even if they are time-barred, and defaulting on debts can negatively impact your credit score.

Unpaid debts can remain on your credit report for up to seven to 10 years from the date of your last payment. That negative mark can lower your credit score, which can make qualifying for new credit or loans harder and lead to higher interest rates. As the debt ages, its impact on your credit score lessens, but you’ll still have a negative mark.

When does the statute of limitations on debt begin?

The “clock” for the statute of limitations on debt typically starts counting down when you miss a payment and your account is marked as delinquent.

For example, if you miss a payment on a debt with a five-year statute of limitations on July 1, 2024, then after July 1, 2029, the statute of limitations will have passed.

This technically means you can’t be sued for payment. However, in some cases, creditors or debt collectors may still try to take you to court.

If you face a lawsuit for a time-barred debt, do not ignore it. You’ll need to respond to the lawsuit and prove to the court that the debt is beyond the statute of limitations. This can protect your rights and help prevent any enforcement against you.

Consider consulting with an attorney or the consumer protection agency in your state to ask for advice on handling your court summons and determine if a debt you owe is time-barred.

Caution: A time-barred debt can be revived

In certain conditions, a time-barred debt can be revived. Making any payment on an old debt may reset the statute of limitations, giving debt collectors a fresh opportunity to sue you. Even verbally acknowledging the debt as yours during a conversation with a collection agent can restart the clock.

To avoid unintentionally reviving a time-barred debt, be cautious about acknowledging it or making any payments unless you are prepared to pay it off completely. If you are contacted about an old debt, request verification and obtain the date of the last payment to ensure you understand its status.

What is the statute of limitations on debt by state?

There are four major categories of debt. Because each is a different type of contract, state laws tend to vary based on the debt type.

These categories include:

• Open-ended accounts: These accounts have revolving balances you can borrow from repeatedly if you keep repaying the balance. Credit cards and lines of credit are examples of open-ended accounts.
• Oral agreements: Some loans are given based on verbal agreements to repay the money. There are no written contracts on these debts.
• Promissory notes: These are written agreements to repay a debt in specified payments at a set interest rate by a designated date.
• Written contracts: Contracts are any written agreement signed by you and a creditor that outlines the terms and conditions of a loan.

Each state has its own statute of limitations. In California, for example, the statute of limitations is two years for oral contracts and four years for written contracts. So, if you live in California and it’s been four years and one day since your last activity on a written contract, a debt collector won’t be able to sue you.

While the statute of limitations in most states is less than six years, some states allow debt collectors up to 10 years or longer to file a lawsuit against you.

Statute of limitations of debt (in years)

Should you pay expired debts?

If you confirm that the debt in question belongs to you, it’s in your best interest to repay it, even if the statute of limitations has expired. Taking care of your debt, regardless of age, can improve your credit and increase your chances of securing affordable financing in the future.

If you can’t afford to make full payments, try negotiating with the collector to see if they will accept payment in full for less than what you owe or allow you to set up a payment plan.

The longer you wait to pay, the worse it will be for your overall financial health. Creditors may continue adding interest, late fees and other charges that worsen your situation. Creditors may still try to pursue their case in court even if the statute of limitations appears to have expired, arguing that the statute of limitations didn’t apply for some reason or disputing when the statute of limitations clock began.

Verify a debt is yours before you pay it

When a debt collector contacts you about an old debt, don’t rush to acknowledge it as yours. Instead, request a debt validation notice, which the debt collector has five days to send, although it might not be received in that time, depending on weekends and holidays. Review it carefully, as it will outline how much you owe and identify the creditor, giving you a clearer picture of the claim against you.

Once you receive the validation notice, you have 30 days to dispute the debt if you believe it’s wrong. Having your credit report handy during this process can help you verify whether the debt is truly yours. If it’s wrong, dispute the debt. If you need help and can afford it, a credit repair company may help ensure the debt is fully removed and prevent debt collectors from contacting you about it again in the future. 

The bottom line

If a debt collector contacts you about an old debt, your state’s statute of limitations protects you from being sued. However, don’t assume this protection prevents you from having to pay legitimate debts. Even after the statute of limitation passes, debt collectors can still reach out and seek payment.

If you owe debts you haven’t paid back, consider working with the creditor or debt collector to create a debt repayment plan that works for your budget and circumstances. 

Frequently asked questions

• Is there a statute of limitations for student loans?

  Private student loans fall under the category of promissory notes. As such, the statute of limitations depends on state laws. However, no statute of limitations exists on federal student loans. Collectors can pursue legal action for unpaid federal student loans indefinitely.

• What can I do if a debt collector harasses me about old debt?

  Regardless of whether the statute of limitations has passed, debt collectors are still bound by the Fair Debt Collection Practices Act (FDCPA), which prohibits harassment, threats or misrepresentation.

• What can I do if a debt collector harasses me about old debt?

  Regardless of whether the statute of limitations has passed, debt collectors are still bound by the Fair Debt Collection Practices Act (FDCPA), which prohibits harassment, threats or misrepresentation.

  If a debt collector violates these rules, you can send a certified letter requesting they cease communication. In addition, you can report violations to your state attorney general, the Federal Trade Commission or the Consumer Financial Protection Bureau. You may also have grounds to sue the collector and receive up to $1,000 in damages.

• Why is a time-barred debt still showing on my credit report?

  The time a debt stays on your credit report is separate from the statute of limitations for legal action. Typically, debts can stay on your credit report for up to seven years, regardless of whether they are time-barred.

  This discrepancy means that while a creditor may not be able to sue you after the statute of limitations has passed, the debt can still affect your credit score. Conversely, a creditor might still sue for a debt no longer shown on your credit report. Understanding your state’s laws can help you more effectively deal with debt collectors.