The statute of limitations on debt depends on where you live or where the debt originated.
If you still receive calls about a debt you stopped paying several years ago, you may wonder if there's a statute of limitations, a time when bill collectors must stop hounding you and let it go. You may also be concerned about the impact unpaid debt has on your credit report. Here, we'll sort out the answers.
Is there a statute of limitations on debt?
Yes, each state has its own statute of limitations on debt. How long a creditor or debt collector has to take legal action against you varies depending on the type of debt. Once the statute of limitations is up, the creditor cannot file a lawsuit against you, and cannot use the court in any way to collect from you. This includes judgements, liens, and wage garnishments. No matter what a debt collector says, they have no power outside the statute of limitations.
What about your credit report?
Negative marks can remain on your credit report after the statute of limitations expires. Credit bureaus have their own rules regarding how long negative events remain on your report, and don't care if the debt has legally expired.
Something to keep in mind: To convince you to pay, a debt collector may promise to have negative remarks removed from your credit history. As lovely as this may sound, it is not always possible. Credit bureaus discourage the removal of negative remarks, saying it makes credit reports less accurate.
Can a debt collector still call?
Just because the statute of limitations is up does not mean that debt collectors must stop calling. A collections representative can contact you regarding an old debt because, technically, you still owe it. Still, a collector has little power once the statute of limitations has expired.
Types of debt
Debt is broken down into several types. To understand how long the statute of limitations lasts in your state, you need to know the kind of debt you carry.
Oral debt
Like a handshake agreement, an oral agreement occurs when you borrow money and agree to pay it back, but don't have a written contract. While a business is unlikely to make an oral agreement with you, it's possible to have an oral agreement with a family member or a friend.
Written debt
Unlike an oral agreement, a written contract puts the details of a lending agreement on paper. This includes the names of both parties, how much was borrowed, the interest charged, when payments are due, and what happens if payments are not made. Once the lender and borrower sign a written contract, it is legally binding. Auto loans are an example of a written contract. And, if you agree in writing to repay a debt, it is also a written contract. A written agreement does not have to be memorialized on a formal document. It could be scribbled on a napkin in a restaurant or on the back of an envelope. As long as both parties signed the agreement, it qualifies.
Promissory debt
The difference between a promissory note and a written contract is that a promissory note tends to be less detailed than a written contract. You still promise to repay the money. A mortgage is considered a promissory note, because it only needs to be signed by you as the borrower to be enforceable.
Open-ended debt
Revolving accounts like a store credit card or line of credit are considered open-ended. That's because you can keep these accounts open as long as you make regular payments. There's also no set date when the balance must be paid in full.
Credit card debt
Although both are considered unsecured debts, states treat major credit card issuer debt differently than they treat store debt, and the statute of limitations tends to be different.
Judgements
If someone took you to court for failure to pay one of these types of debt and won a judgement, there is an additional statute of limitation on the judgement in most states, ranging from three to 20 years.
Key facts worth remembering
Here are four quick facts about the statute of limitations worth knowing:
- Debts expire at different times, depending on the state.
- Depending on the type of debt, the statute of limitations may be tied to where the debt was created, rather than the state in which you live. Major credit cards are an excellent example of this. When you sign up for a card, you sign a contract. Buried in the mountain of small print is a statement about which state's jurisdictional laws apply if there's a problem between you and the credit card issuer.
- The statute of limitations is typically calculated from the last date of activity on the account. Let's say a credit card goes unpaid for two years, but you make a payment at the two-year mark. The statute of limitations clock starts all over.
- Even if the statute of limitations has run out, negative information can remain on your credit report for seven years or more.
Statute of limitations on debt by state (in years)
| State | Oral Debt | Written Debt | Promissory Debt | Open-Ended Debt | Credit Card Debt |
|---|---|---|---|---|---|
| Alabama | 6 | 6 or 10* | 6 | 6 | 3 |
| Alaska | 3 | 3 | 3 | 3 | 3 |
| Arizona | 3 | 6 | 6 | 3 | 6 |
| Arkansas | 3 | 5 | 3 | 3 | 5 |
| California | 2 | 4 | 4 | 4 | 4 |
| Colorado | 6 | 6 | 6 | 6 | 6 |
| Connecticut | 3 | 6 | 6 | 3 | 6 |
| Delaware | 3 | 3 | 3 | 4 | 3 |
| District of Columbia | 3 | 4 | 3 | 3 | 3 |
| Florida | 4 | 5 | 5 | 4 | 5 |
| Georgia | 4 | 6 | 6 | 6 | 6 |
| Hawaii | 6 | 6 | 6 | 6 | 6 |
| Idaho | 4 | 5 | 5 | 5 | 5 |
| Illinois | 5 | 10 | 10 | 5 | 5 |
| Indiana | 6 | 6 | 10 | 6 | 6 |
| Iowa | 5 | 10 | 5 | 5 | 5 |
| Kansas | 3 | 5 | 5 | 3 | 3 |
| Kentucky | 5 | 10 | 15 | 5 | 5 |
| Louisiana | 10 | 10 | 10 | 3 | 3 |
| Maine | 6 | 6 | 6 | 6 | 6 |
| Maryland | 3 | 3 | 6 | 3 | 3 |
| Massachusetts | 6 | 6 | 6 | 6 | 6 |
| Michigan | 6 | 6 | 6 | 6 | 6 |
| Minnesota | 6 | 6 | 6 | 6 | 6 |
| Mississippi | 3 | 3 | 3 | 3 | 3 |
| Missouri | 5 | 10 | 10 | 5 | 5 |
| Montana | 5 | 8 | 8 | 5 | 8 |
| Nebraska | 4 | 5 | 5 | 4 | 4 |
| Nevada | 4 | 6 | 3 | 4 | 4 |
| New Hampshire | 3 | 3 | 6 | 3 | 3 |
| New Jersey | 6 | 6 | 6 | 6 | 6 |
| New Mexico | 4 | 6 | 6 | 4 | 4 |
| New York | 6 | 6 | 6 | 6 | 6 |
| North Carolina | 3 | 3 | 5 | 3 | 3 |
| North Dakota | 6 | 6 | 6 | 6 | 6 |
| Ohio | 6 | 8 | 15 | 6 | 6 |
| Oklahoma | 3 | 5 | 5 | 3 | 5 |
| Oregon | 6 | 6 | 6 | 6 | 6 |
| Pennsylvania | 4 | 4 | 4 | 4 | 4 |
| Rhode Island | 10 | 10 | 10 | 10 | 10 |
| South Carolina | 3 | 3 | 3 | 3 | 3 |
| South Dakota | 6 | 6 | 6 | 6 | 6 |
| Tennessee | 6 | 6 | 6 | 6 | 6 |
| Texas | 4 | 4 | 4 | 4 | 4 |
| Utah | 4 | 6 | 6 | 4 | 6 |
| Vermont | 6 | 6 | 5 | 3 | 6 |
| Virginia | 3 | 5 | 6 | 3 | 3 |
| Washington | 3 | 6 | 6 | 3 | 6 |
| West Virginia | 5 | 10 | 6 | 5 | 10 |
| Wisconsin | 6 | 6 | 10 | 6 | 6 |
| Wyoming | 8 | 10 | 10 | 8 | 8 |
*Depending on whether the written contract was "sealed." Sealed written contracts have a statute of limitations of 10 years. Data source: SoloSuit.
Knowing the statute of limitations on debt is not about gaming the system. It's about understanding when you're legally off the hook and knowing when a debt collector lies about the legal right to sue.
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