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Is Your Debt Too Old? Know Your Debt’s Statute of Limitations

Debt. You accrued it, you have to pay it off…or do you? Yes, we’ve got your attention now.

Unbeknownst to many, all traditional debts have a statute of limitations. In other words, your debt has an expiration date. After that statute of limitations has ended, creditors may no longer sue you for prepayment. In a nutshell, you are legally not responsible to pay back that debt.

Below, we discuss the ins and outs of a debt’s statutes of limitations, a statute those in debt will want to know.

Why Does Debt Have a Statute of Limitations?
Simply put, a statute of limitations (SOL) exists to protect the consumer from either being sued or worrying about being sued for the entirety of their lives. It protects people from having a thirty year old debt come back to haunt them.

When Does the SOL start?
The instant you miss a payment or your debt is declared a “bad debt” by your creditor is the instant the clock starts ticking. The tricky part lies in the fact that if you make a payment after the clock has started, it resets the SOL. Even if the SOL has completely expired, making a payment, making a promise of payment, entering a payment agreement, or making a charge using the account can reset the clock and reset the statute.

For example, if you have not made a payment on a debt for ten years and you suddenly make one, that debt - though expired - once again becomes valid and your creditors, armed with a new SOL, can legally pursue you.

How Do You Tell when the SOL Ends?
As demonstrated above, it’s important to know when your SOL expires. This way, you won’t awaken old, expired debt.

To begin this process, you will need to procure documentation and determine when the last date of activity took place. This information can be found if you have an online credit card or bank account. If you don’t, your creditor is legally obligated to provide the information. You can also find this information through your credit report.

Once you know when the last activity took place, you will need to research the SOL for your state. If you have moved states, use the state where you are currently located.

Please note that different states may treat the same debt differently. A credit card debt might be considered an open-ended account in one state and a written contract in another. The only way to know for sure is to check your state laws or consult an attorney. See the Statue of Limitation table at the end of this article for assistance.

If the SOL is Over, are You Free and Clear?
The SOL only limits the time frame in which a creditor can sue you, it has no affect on your credit report or credit score. So, in short, you’ll still be in debt, but your creditor will have no way to make you pay. Your debt, however, will not be removed from your credit report unless it is actually paid off or you declare bankruptcy.

Will You still be Contacted by Creditors?
Creditors may still try other methods to persuade you to pay, including calls and letters. If a creditor contacts you after the SOL has ended, simply inform them of the expiration. They may try to trick you into believing that the SOL has not ended or that it was longer than you thought, but don’t fall for it. Instead, send them a certified letter stating your debt’s expiration date. After this, they will no longer be able to contact you.

Can You still be Sued after the SOL has Expired?
Technically, a creditor can still go after you after the SOL is up. But, if you have proof that the SOL has expired, your creditor will have no case. This makes obtaining the proper documentation critical. If you don’t have proof that the SOL has expired, you have no way of proving that you no longer have to pay.
 
If you are sued, it is important to remember that you must appear in court to present your claim that your debt is past the statute of limitations. Not showing up in court will most definitely result in a judgment against you.

The expiration date of your debt is a good thing to know, but this is by no means a free pass to rack up debt and never pay it. Even once the SOL has expired, your credit will still be hurt.

Overall, if you have the means to pay off your debt before the SOL is exhausted you should. This helps your credit, and prevents you from being legally pursued while the debt is still valid.

Statute of Limitations Table:
more info

STATE

ORAL

agreements

PROMISSORY

agreements

OPEN

accounts

WRITTEN

agreements

Alabama

6

6

3

6

Alaska

6

6

6

6

Arizona

3

5

3

6

Arkansas

3

6

3

5

California

2

4

4

4

Colorado

6

6

6

6

Connecticut

3

6

6

6

Delaware

3

6

3

3

District of Columbia

3

3

3

3

Florida

4

5

4

5

Georgia

4

6

4

6

Hawaii

6

6

6

6

Idaho

4

10

4

5

Illinois

5

6

5

10

Indiana

6

10

6

10

Iowa

5

5

5

10

Kansas

3

5

3

5

Kentucky

5

15

5

15

Louisiana

10

10

3

10

Maine

6

6

6

6

Maryland

3

6

3

3

Massachusetts

6

6

6

6

Michigan

6

6

6

6

Minnesota

6

6

6

6

Mississippi

3

3

3

3

Missouri

5

10

5

10

Montana

5

8

5

8

Nebraska

4

6

4

5

Nevada

4

3

4

6

New Hampshire

3

6

3

3

New Jersey

6

6

6

6

New Mexico

4

6

4

6

New York

6

6

6

6

North Carolina

3

5

3

3

North Dakota

6

6

6

6

Ohio

6

15

4

15

Oklahoma

3

5

3

5

Oregon

6

6

6

6

Pennsylvania

4

4

4

4

Rhode Island

15

10

10

15

South Carolina

10

3

3

10

South Dakota

6

6

6

6

Tennessee

6

6

6

6

Texas

4

4

4

4

Utah

4

6

4

6

Vermont

6

5

6

6

Virginia

3

6

3

5

Washington

3

6

3

6

West Virginia

5

6

5

10

Wisconsin

6

10

6

6

Wyoming

8

10

8

10


 
Note: A credit card is usually considered to be an open account.

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