What Is the Statute of Limitations on Debt?

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What is the Statute of Limitations on Debt?
A statute of limitation prohibits lenders from sueing debtors after the specified time, however the debt is still in your credit file.
By Sean Pyles Senior Writer | Personal finance and debt Sean Pyles leads podcasting at NerdWallet as the producer and host of the NerdWallet's "Smart Money" podcast. In "Smart Money" Sean talks with Nerds from NerdWallet's NerdWallet Content team to answer listeners' questions about personal finance. With a particular focus on sensible and practical advice on money, Sean provides real-world guidance that can help consumers better the financial situation of their lives. In addition to answering listeners' money questions on "Smart Money" Sean also interviews guests who are not part of NerdWallet and produces special segments on topics such as the racial gap in wealth, how to start investing and the background of college loans.
Before Sean lead podcasting at NerdWallet He also covered issues that dealt with consumer debt. His work has appeared on USA Today, The New York Times and other publications. When he's not writing about personal finance, Sean can be found playing in his garden, going on runs , and taking his dog on long walks. Sean is located at Ocean Shores, Washington.





August 5, 2021


Written by Kathy Hinson Lead Assigning Editor Personal finance, credit scoring, managing money and debt Kathy Hinson leads the core personal finance team at NerdWallet. In the past, she worked for 18 years working at The Oregonian in Portland in roles including copy desk chief and team director of design and editing. Her previous experience includes news and copy editing at several Southern California newspapers, including the Los Angeles Times. She earned a bachelor's degree in mass communications and journalism in the University of Iowa.







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The statute of limitations on debt is a regulation that restricts how long a creditor can sue you for payment on a debt.
All consumer debts, from debts from credit cards to medical bills, come with limitations on the number of years creditors have the legal right of suing you for repayment.
The law of the state in which you reside determines the time limit for particular debts, regardless of whether you have incurred this debt in another location. In some states the deadline for extending the statute of limitation is 3 years. In other states, it's up to 10.
The rules may differ greatly states to states. There are 22 states in which, for instance, the is six years. Some creditors, however, add clauses to their agreements which state that the laws of the state will determine the terms of the agreement regardless of where the customer lives.
Take care if creditors are trying to harass you, because making just one payment on an expired debt can reset the clock and allow the creditor to reclaim their right to take legal action against you.
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How do you tell if a debt is time-barred
When the time limit on debt passes the debt is deemed " " which means you aren't able to legally sue However, creditors can still try.
The obligation to pay however, stays on the books. So, any future creditors will notice it, making it difficult for you to secure new credit lines, and the ones you do receive will have higher interest rates.
"Determining whether a debt is over its statute is by taking a look at the kind of debt it is and the applicable statutes," says Colin Hector, staff attorney at the Federal Trade Commission. "You have to be aware of the legal system to be able to check with the legal aid system, an attorney or the office of the state's attorney general."
These sites can help you find the time limit for the debts you have to pay. The best option for you is based on your financial situation and your time:
: Can provide free legal information but may be difficult to contact.
: Inexpensive, but their attorneys and paralegals are often stressed and overwhelmed.
: Can offer personal and speedier assistance, but at a higher cost.

Information from the collector
Debt collectors have a legal obligation to inform you about the debt they're attempting to collect. Inquiring for more details will help you determine if a debt is beyond its statute of limitations.
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Be cautious when talking with collectors. Don't make promises to make a payment or provide them with any details about your payment, like a bank account, because they may take that as a sign of acceptance for the obligation.
If you recognize the debt as being yours
Take all the information you can on your file, such as the amount, any payment you made, as well as the date you made the last payment. This serves as your arsenal against the debt collectors.
You can ask the collector 2 simple questions:
Do you know if the debt is time-barred?
When was the final payment?

If the debt collectors are able to answer the first question, they are required by the to answer it honestly. However, they're not obliged to respond in any way.
If the collector does not respond, ask regarding the date of your last payment. The clock on the statute of limitations kicks in when a account becomes delinquentfor a period of 30 days after the date you missed the payment.
If you've not made any due payments on time, it might begin when you took out the debt or when it was declared as delinquent, based on your state.
If a debt collector won't divulge the information requested, consult the letter of validation for debt. A debt collector has to provide the letter within five days after the initial contact. If you haven't received it within 10 days, you should request it. This notice should include the amount due, dates of payment, the payment, the collector and how to request information on the original creditor.
If you don't acknowledge the debt, you will be in trouble.
The debt collection industry is well-known for trying to collect on debts from wrong individuals. As debts are transferred by the original creditor to a third party and likely sold again, a debt collector will likely be able to provide less and less accurate information. In the end, you might be asked to settle a debt that's not even yours.
Review your own documents and the validation letter to determine any differences. This will help you decide whether or not you should contest the debt.
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About the author: Sean Pyles is the executive producer and host for the NerdWallet's Smart Money podcast. His writing has been featured on The New York Times, USA Today and elsewhere.







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