What Is a Statute of Limitations on a Debt?
As the Consumer Financial Protection Bureau explains on its site, “a statute of limitations is the limited period of time creditors or debt collectors have to file a lawsuit to recover a debt.” These periods vary according to state laws and your type of debt, the CFPB notes. If you’re sued for a debt and the debt is too old, you may have grounds for defense. However, if you are being sued, we recommend speaking with an attorney who can offer her expertise, especially if you have reason to believe the statute of limitations, or SOL, has expired. “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 your defense,” the CFPB warns. The onus is on the consumer to note that the statute of limitations has passed.
In this article, we’ll cover the basics you need to know about debt collections with regards to their statute of limitations by state.
How Long Do Creditors and Debt Collectors Have to Collect?
As we mentioned above, every state has a statute of limitations that limits how long a creditor or debt collector can successfully collect a debt. In California, for instance, the statute of limitations varies by the type of lawsuit. A breach of a written contract is given four years from the date the contract was broken, while property damage allows three years from the date the damage occurred.
Typically, the statute of limitations starts when you miss your first payment with the original creditor. It does not start when the account was placed for collection. If a debt collector tried to sue you after this time period has expired, you can raise the SOL as a defense against the lawsuit.
Many consumers confuse the length of time that debts can appear on their credit reports with the debt collection statute of limitations. However, these are often two different time periods. If you have debts that have been charged off and/or are in collections, it’s critical that you get your credit reports to find out what is being reported. (You can view two of your credit scores for free on Credit.com.) Not only will this give you helpful information about the dates you fell behind, it may also alert you to collection accounts or even judgments you did not know existed. Here are two things you can do:
- Get your free annual credit reports from AnnualCreditReport.com to see the specific information that is reported.
- Find out whether these items are affecting your credit by checking your credit scores.
Use the statute of limitations map provided below as a guideline, and be sure to read the important tips below. Simply click on your state for more information.
Note: Credit card accounts are generally considered open accounts while installment accounts — like an auto loan — are often considered a written contract. But not always. See the important note below.
Understanding the State Statute of Limitations
This chart offers general guidelines for state statutes of limitations, but please keep in mind that it’s not always as straightforward as it seems. For example, the vast majority of state laws do not spell out the statute of limitations specifically for credit card debts. Sometimes those fall under written contracts, and other times they fall under open accounts. Or sometimes they can fall under either category, depending on the specifics of the situation.
If you have questions about the statute of limitations for your debt, we recommend you contact your state attorney general’s office, or even better, a consumer law attorney in your area. The latter is especially critical if you are being sued for payment.