Statute of Limitations on Debt Collection

How the Statute of Limitations on Debt Works

Depending on what state you are living in, there is a statute of limitations which limits the amount of time that a debt collector or creditor can sue you to collect a debt. The amount of time is determined by state law but it is usually somewhere between six to ten years, however it can be anywhere from three to fifteen years from the date that the debt was written off. The purpose of the statutes is to allow old debts to fall off of your credit record after a certain amount of time, but still allow the creditor a fair amount of time to collect the debt.

Don’t Abuse the Statute of Limitations

However, if you’re thinking of just waiting out your creditors and not paying off the debts you owe, don’t go on that celebratory credit card spree just yet. Just because a creditor cannot sue after the statute of limitations has expired doesn’t mean that they won’t try to get their money back. Debt collectors are not explicitly prohibited from trying to collect time-barred debts; they just can’t sue. In fact, if the statute of limitations is about to run on one of your old debts, you may find your phone suddenly ringing with threatening calls from collection agencies who demand immediate payment.

How to Handle Current Debt Collectors

If a debt collector does contact you regarding an old debt, your best recourse is to advise them that the statue of limitations has run out, and tell them not to contact you again regarding the debt. It is important not to make any new agreements regarding debts that are time-barred or about to expire. Do not admit to the debt, do not make any agreements to pay the debt and do not agree to send any money. Agreeing to do so may re-activate the debt and start the time clock running all over again.