Statute of Limitations on Debt Collection by State

statute of limitations on debt collection

Do you have bill collectors contacting you about unpaid debt? If so, it’s important to understand your rights. Even if you have debt that’s still unpaid, your creditors only have a certain amount of time to take legal action against you.

So, before you think about talking to a bill collector or agreeing to a new payment arrangement, it’s important to know what the statutes of limitations are in your state. It’s these statutes that can help you determine your next step.

Keep reading to learn more about what statutes of limitations on debt collection are and how they work.

In This Piece

What Is a Statute of Limitations on Collections?

The statute of limitations on collections is the amount of time a creditor or debt collector has to file a lawsuit to collect unpaid debt. These statutes vary by state, type of debt and terms of the contract, if there is one.

Occasionally, creditors and debt collectors may try to file a lawsuit after the statute of limitations has ended. So, it’s your responsibility to provide the courts with proof that it’s past the statute of limitations. So, be sure to save any payments made or communications you had with any creditor or collections agency.

When the clock for the statute of limitations on debt begins varies from state to state. It either starts when you miss your first payment or when you have the last communication with the creditor or debt collector.

Can a Debt Collector Restart the Clock on My Old Debt?

There’s a chance that communication with a debt collector could restart the clock on the statute of limitations. For example, if you agree to any new payment arrangement or make a payment, this act could restart the clock.

Effect of Statute of Limitations on Your Credit Report

If you’re looking for ways to repair your credit, the statute of limitations has no impact. It’s important to understand that the statute of limitations doesn’t affect how long a debt can remain on your credit report. These are two different policies.

In most cases, a debt can remain on your credit report for up to seven years. This is the case even if the statute of limitations has ended. This means that while creditors may no longer be able to take you to court, your debt could still impact your credit score.

What Is the Statute of Limitations on Debt Collections by State?

Statutes of limitations on collections vary by state and by type of credit account. There are four basic types of debt:

  • Written debt. Written debt occurs when there’s a signed contract that details the terms of the loan. This doesn’t have to be a formal contract. It can simply be written on a piece of paper.
  • Oral debt. Oral debt is a verbal agreement made between two people that details the terms of the debt.
  • Promissory notes. Promissory notes are written agreements where you agree to make a set number of payments over a set number of years. While it is also a form of written debt, promissory notes normally include a promise to repay as well as a repayment schedule. This makes them more legally binding than a written debt or IOU. Common types of promissory notes include home mortgages and student loans.
  • Open-ended credit. Open-ended credit includes any type of revolving credit account, such as credit cards.

Below is a look at the statute of limitations on collection by state, broken down by debt type.

StateWritten ContractOral ContractPromissoryOpen-Ended
New Hampshire3363
New Jersey6666
New Mexico6464
New York6666
North Carolina3353
North Dakota6666
Rhode Island10101010
South Carolina3333
South Dakota6666
West Virginia10565

Source: The Balance

How Long Can You Legally Be Chased for a Debt?

Just because the statute of limitations has ended doesn’t mean you don’t still owe the debt. It only means that creditors and debt collectors can no longer sue you in court to collect the money due. Technically, you still owe the debt. So, debt collectors and creditors can still try to collect this money.

This means you still might receive calls from debt collectors. It’s important to understand that if you make a new payment agreement regarding an old debt, it can restart the statute of limitations for collections clock. At that point, the debt collector could sue you in court no matter how old the debt is.

Get Help Repairing Your Credit

If you’re working to repair your credit, you may want to pay your debt off even if the statute of limitations has ended. For example, if you live in a state that has a 3-year statute of limitations on credit card debt, this debt may still show up on your credit report for up to seven years.

Paying this debt may be the only way to repair your credit before the end of the 7-year period by possibly reducing the impact of this debt by paying it off. If this is the case, the credit card company may work out a deal with you for a lower amount. Sometimes, these companies agree to remove some of the interest accrued to receive some money. This can be a good option for low-income families looking to repair their credit.  

Sign up for today and take the first step toward understanding your credit and what factors are impacting your credit health.

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