What Is the Statute of Limitations on Debt?

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What is the Statute of Limitations on Debt?
A statute of limitation prevents creditors from suing debtors for a certain period, but the debt is still in your credit file.
by Sean Pyles Senior Writer | Personal financial, financial debt Sean Pyles leads podcasting at NerdWallet as the host and producer of the NerdWallet's "Smart Money" podcast. In "Smart Money" Sean talks with Nerds from the NerdWallet Content team to answer the questions of listeners about their personal finances. With a particular focus on sensible and practical money tips, Sean provides real-world guidance that can help consumers better their financial 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 that explore subjects such as the racial gap in wealth and how to begin investing and the background of college loans.
Before Sean was the host of podcasts at NerdWallet He also covered issues related to consumer debt. His work has appeared on USA Today, The New York Times and other publications. When Sean isn't writing about personal finances, Sean can be found digging around his garden, going for runs , and walking his dog for long walks. He lives within Ocean Shores, Washington.





August 5, 2021


Editor: Kathy Hinson Lead Assigning Editor Personal financial, credit scoring, financial management and debt Kathy Hinson leads the core personal finance team at NerdWallet. Previously, she spent 18 years with 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 for various Southern California newspapers, including the Los Angeles Times. She graduated with a bachelor's in mass communications and journalism from The University of Iowa.







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The statute of limitation on debt is a law that limits the length of time that creditors can pursue you to collect a debt.
Every consumer's debt, from the balances on credit cards as well as medical expenses, come with limitations on the number of years in which creditors have the legal right to sue you for payment.
Typically, the law of the state where you live sets the time limit for particular debts, regardless of whether you have incurred this debt in another location. In some states, the statute of limitations is 3 years. In others, it's up to 10.
The rules may differ greatly state to state. For 22 states for example it is six years. Some creditors, however, include clauses in their contracts saying a specific state's laws will determine the terms of the agreement regardless of the state where the consumer lives.
Take care if creditors are trying to harass you, because making any payment to a debt that's expired can reset the clock and revive the creditor's ability to pursue you.
Watch your debts dwindle
Create an account that allows you to connect your credit cards, loans and accounts to keep them all in one place.






How to determine if a loan is time-barred
After the statute of limitations for debt expires the debt is deemed " " which means you aren't able to legally sue -- but collectors may still try.
Your obligation to pay, however, remains on your books. So, any future creditors will be aware of it, which can make it more difficult to secure new lines of credit and those you do receive will have higher rates of interest.
"Determining the extent to which a debt has gone over its statute is by taking a look at the kind of debt it is and the statutes that apply to it," says Colin Hector who is a staff attorney at the Federal Trade Commission. "You require some legal knowledge to be able to check with the legal aid system, an attorney or an office of the state's attorney general."
These sources can assist you in determining the time limit for your debts. The best option for you will depend on your financial situation and your time:
The lawyer can provide free legal information , but could be difficult to reach.
: Inexpensive, but their attorneys and paralegals often overbooked and overworked.
It is possible to provide assistance that is more personalized and quicker, but at a higher cost.

Getting information from the collector
Debt collectors have a legal obligation to provide you with information about the debt they're trying to recover. Inquiring for more details will help you determine if a debt is beyond its statute of limitations.
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Be wary when speaking with collectors. Don't make promises to pay or provide them with any payment details, such as an account at a bank, as they might interpret it as a sign of acceptance of debt.
If you recognize the debt as being yours
Collect all information you have on it, such as the amount, any payments you made as well as the date you made the last payment. This will serve as your weapon against the debt collectors.
The collector should be asked two basic questions:
Does the debt have a time-barred expiration date?
When was your last installment?

If the debt collectors answer the first question, they are required by law to answer the question in a truthful manner. However, they're not required to answer it at all.
If the collector does not respond you, inquire regarding the date of your last payment. The clock on the time limit begins when the account is delinquentfor a period of 30 days after you miss a payment.
If you've not made any due payments on time, it could begin when you paid off the debt or the date it was declared delinquent, depending on your state.
If a debt collector is unwilling to divulge the information requested, consult the letter of validation for debt. A collector must send you this letter within 5 days from the first contact. If you haven't received it within 10 days, request it. The notice should contain the amount due and dates of payment, the payment, the name of the collector and how to request information about the original creditor.
If you don't recognize the debt
The debt collection industry is notorious for attempting to collect debts from wrong individuals. When debts are sold by the original creditor to a third party , and possibly transferred to the debt collector may have less and less precise information. As a result, you could be approached to pay off a debt which is not even yours.
Refer to your own records along with the verification letter, to clarify any discrepancy. This will allow you to determine whether you need to challenge the debt.
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Author bios: Sean Pyles is the executive producer and host on NerdWallet's Smart Money podcast. His work has appeared in The New York Times, USA Today and elsewhere.







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