Key takeaways

  • There is a statute of limitations on debt, but it varies depending on your debt type and location.
  • The four main categories of debt include open-ended accounts, oral agreements, promissory notes and written contracts.
  • The average statute of limitation lasts between three and six years, but it can be as long as 10 years.

Are debt collectors contacting you about a debt that fell into collections years ago? If so, you should research to see if you are still required to pay that debt.

Debt collectors have a limited time to file a lawsuit against you to recover debt. While the amount of time varies depending on the specific type of debt and the statute of limitations in your state, it generally ranges from three to six years. Once the statute of limitations has passed, debt collectors no longer have the right to sue you for the debt.

However, that doesn’t necessarily mean you’re off the hook. Creditors can still try to collect the debt on their own as long as they don’t violate the law in their attempts to do so. You will still need to understand how the debt affects your credit and if you should pay it.

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 means they won’t be able to place a property lien against your home or garnish your wages. 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. 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 and make qualifying for new credit or loans harder. 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.

At this point, the account is considered “time-barred.” Technically, you can’t be sued or taken to court for payment. However, in some cases, creditors or debt collectors may still attempt to sue you.

If this happens, don’t assume you don’t need to take action just because the statute of limitations has expired. You must still respond to the summons and present your case in court to prove that the debt is time-barred.

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

Caution: A time-barred debt can be revived

In certain conditions, a time-barred debt can be revived. If you make any payment on an old debt, the statute of limitations may be reset, 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 specified interest rate by a specified 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.

Should you pay expired debts?

Even if the statute of limitations has expired, it’s in your best interest to repay the debt you owe.

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.

Taking care of your debt, regardless of its age, can improve your credit and increase your chances of securing affordable financing in the future.

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

If a debt collector contacts you about an old debt, don’t automatically assume you owe the money.

First, request a debt validation notice from the debt collector within five days.  This notice details how much you owe and who the creditor is.

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 compare the verify if the debt is truly yours. If it’s wrong, it may help to work with a credit repair company.

The bottom line

The statute of limitations on debt protects you from being sued by debt collectors after a certain amount of time has passed. However, this does not mean you no longer owe the debt.

After the statute of limitations has passed, collectors may still contact you and seek payment. If you have outstanding debts, it’s in your best interest to create a debt repayment plan that works for your budget and circumstances.

Frequently asked questions

  • 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.
  • 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 be awarded up to $1,000 in damages.
  • 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.