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What is the Statute of Limitations on Debt?

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If you have an unpaid debt hanging over you that you’ve been unable to repay, you may wonder, “Is there a statute of limitations on debt?” The statute of limitations on debt is the period of time after which a creditor cannot sue a debtor over borrowed funds. The statutes of limitations vary by state, as well as by the kind of debt you’re talking about.

Read on to learn more about the statute of limitations on debt where you live and how it can impact you.

What is the statute of limitations on debt?

The various state statutes of limitations on debt ensure that creditors have only a limited amount of time to sue borrowers in pursuit of the collection of a debt. For instance, in California, most debts have a statute of limitations of four years — that means that once a California debt reaches four years of age, it’s considered time-barred.

When a debt is time-barred, here’s what you need to know:

  • Debt collectors can’t sue you in order to collect on it.
  • You may still be contacted over the debt.
  • The statute of limitations may reset, in some cases. If you make partial payments or acknowledge the time-barred debt, such as by sending written notice about it, the creditor may once more be able to sue you for the full amount, including fees and interest.
  • It can still have an effect on your credit history and your ability to take out new lines of credit in the future.

How do you tell if your debt is time-barred?

1. Determine your last debt payment

Generally, the “clock” on the statute of limitations begins at the last date of account activity — which often means the last date of payment. (It’s important to note, again, that in some jurisdictions, even making a promise to pay can count as activity and restart the clock.)

You can get a free copy of your credit report from all three major credit bureaus at AnnualCreditReport.com (these reports are required by federal law to be accessible once per year, but have been made available weekly since the COVID-19 pandemic began) — this will show the last dates of payment on your various accounts, as well as other relevant information like the total balance.

2. Find the relevant law in your state to compare

As mentioned above, the statute of limitations on debt varies by state and by the type of debt in question. While tools like the map below are a good starting place, the best way to learn about the relevant laws in your state is to look at the legislation yourself and confirm that you have the most accurate and up-to-date information about the statutes that govern your specific circumstances.

3. Get in touch with a debt collections lawyer

Given the complexity of the statutes of limitations surrounding debt, having a debt collections lawyer on your side can be a major boon if you’re facing litigation. An attorney can help ensure you don’t accidentally make any moves that could restart the clock on the statutes of limitations on your debts, as well as help you keep as much of your money as possible.

Should you pay debts that are past the statute of limitations?

If collectors are coming after you for a time-barred debt, you have three options; it’s advisable to consult a debt collections lawyer before deciding which is best for you:

  • Don’t pay the debt. Although you can’t be successfully sued after the statute of limitations is over, collectors can still pursue you — and the debt can still have an effect on your credit.
  • Pay some of the debt. However, keep in mind that in some states, making a partial payment (or even promising to pay) can restart the clock on the statute of limitations.
  • Pay off the debt in full. In some cases, a collections agency may accept a sum lower than the debt total to settle your account, but you should get a signed, written document releasing you from further obligation if you go this route. Always keep records of any payments you make against any debt.

What are the statute of limitations on debt by state?

It’s important to get familiar with your state laws and understand how the statute of limitations works in your specific scenario. Check the map below to see the statute of limitations on debt in your state:

What are the statutes of limitations by type of debt?

Credit card debt

Credit card debt is one of the most common forms of debt in the country — the household average is $6,270, according to the Federal Reserve’s most recent Survey of Consumer Finances. The statute of limitations on credit card debt varies from as low as three years, in states like Louisiana and Arizona, to as many as 10 years in states like Rhode Island and West Virginia.

Private student loan debt

While there’s no statute of limitations on federal student loan debt, private student loans are a different matter. The statute of limitations on private aid ranges from three years (Alaska, Mississippi) to as many as 10 years in Kentucky.*

*Note: Kentucky law is complex when it comes to the statute of limitations on debt. If you live in Kentucky and find yourself unable to repay your loans, you may benefit from consulting with an attorney to understand Kentucky’s legislation on statute of limitations. 

Medical debt

Medical debt is one of the leading causes of bankruptcy in the U.S. The statute of limitations on medical debt is as long as 10 years in states like Wyoming and Missouri — however, in Alaska and South Carolina, the statute of limitations on medical debt is only three years.

Auto loan debt

Auto loan debt, and other types of retail installment sales contracts, are also subject to statutes of limitations. These limits range from a single year in Iowa to six years in Mississippi (though the figure is four years in a majority of states). Keep in mind, however, that your lender may pursue other retaliatory measures, such as repossessing your vehicle, before filing a lawsuit.

Mortgage debt

A home is often the single largest purchase a consumer will ever make, and few people can manage it without taking out a mortgage. The statute of limitations on mortgage debt ranges from three years in Alaska and Mississippi to a whopping 20 years in South Carolina. However, in all likelihood, a lender would initiate foreclosure before enough time would elapse to use these limitations as a defense.

Tax debt

Both federal and state tax debt are subject to statutes of limitations. On the federal level, the government has 10 years to sue taxpayers in pursuit of payment. On the state level, the statutes vary; for instance, in Texas the statute of limitations is three years whereas in Oregon, there is none.

What do you do if a debt collector contacts you over time-barred debt?

If you recognize the debt as yours

Although the statute of limitations does keep creditors from suing consumers on old debts, it doesn’t stop them from attempting to collect payments — or from reporting loan default to the consumer reporting agencies that are responsible for calculating your credit score. Therefore, it’s important to tread carefully.

Here are a few of your options if you’re contacted by a debt collector over money you owe, but may be past the statute of limitations on debt:

  • Ask the collector directly whether or not the debt’s statute of limitations has expired. The collector does not have to legally answer — but if they do, the law requires that they answer truthfully.
  • You can also write a letter to a debt collector demanding that they cease communication, and are required to comply by the Fair Debt Collection Practices Act (FDCPA). If you’ve hired an attorney and inform the collector that you’ve done so, they are obligated to attempt to communicate with your legal representation before contacting you personally.

The FDCPA also prevents debt collectors from doing the following:

  • Harassing or threaten you
  • Lying or misrepresent information
  • Using profane language

However, until a debt is past the statute of limitations, you can be sued for repayment — and if you’re sued for a time-barred debt, you still need to respond and potentially show up in court to defend yourself.

If you don’t recognize the debt

If you receive a message from a debt collector and you don’t recognize the debt or don’t believe it’s yours, ask the debt collector to verify the debt. If you receive verification and still don’t recognize the debt, send the debt collector a letter of dispute within 30 days. Be sure to keep records for yourself and consider sending your letter of dispute as certified mail with a return receipt to confirm that the debt collector received it.

After the debt collector receives the letter of dispute, it must send you written proof of the debt before contacting you again to collect. For example, the debt collector could send you the original bill or invoice of the debt.

If you still don’t believe the debt belongs to you, contact the following:

Statute of limitations on debt: FAQ

How long before a debt is uncollectible?

It depends on where you live, but, in most states, if the debt is yours, debt collectors may pursue repayment from you indefinitely until the amount is paid. However, if the collector sues you over the debt, the case may lean in your favor if the debt is old and past the statute of limitations on debt.

What happens after seven years of not paying debt?

After seven years, unpaid debts will be removed off your credit report. However, what happens next will depend on the state you live in. If you live in a state where the statute of limitations on debt is shorter than seven years, then the debt is time-barred and the collection agency may not be able to file a lawsuit against you. However, that doesn’t mean a debt collector can’t continue to contact you and attempt to collect on the debt. If the statute of limitations is not up after seven years, the debt collector can still sue you for the unpaid debts.

What happens if you never answer debt collectors?

Even if you don’t answer calls from debt collectors, it isn’t likely that they’ll stop contacting you. It may lead them to file a lawsuit in order to obtain the money that you owe if you don’t come to an agreement with the collection agency. If that happens, you’ll want to get yourself an attorney that can advise you through the process.

Do collection agencies have to prove debt?

When a debt collection agency contacts you regarding an overdue debt, there are several things they’re legally obligated to disclose to you:

  • The name of your lender
  • How much you owe
  • That you have 30 days to dispute the debt — you can do this by sending a letter of dispute
  • Once you send a letter of dispute, the debt collector must provide you verification of the debt — if you request the name of the original lender, the collection agency must provide that as well if it’s different than the current lender
 

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