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A statute of limitations is a common feature of the United States legal system. It limits the amount of time someone can be held accountable for something. Debt collection is no different. Creditors, collectors, and debt buyers only have a certain amount of time that they can file suits to collect on a debt.

However, the statute of limitations on debt can be pretty delicate. You can do things to reset it and in some states, collectors can continue to seek payment as long as they don’t go through the courts. As a result, bad debt can end up following you even after the statute of limitations expires.

The information below can help you understand how long collectors can pursue you. It also explains what they (and you) can do that may extend that time.

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The statute of limitations on collection

Every state has different rules on the number of years that a debt collector can pursue payment through the courts. The maximum is 15 years, but the specific number is set by each state. It is also depends on the type of contract that created the debt.

The shortest statute of limitations is only two years for oral contracts made in California.
These are the four types of contracts you can make for debt:

  • Written contracts
  • Oral contracts
  • Promissory notes
  • Open-end accounts (credit line)

Really, the only two most consumers need to be concerned about are written contracts (like loans) and open-end accounts (like credit cards).

If you’re curious about the specific statutes in your state, Bankrate has a helpful table that shows the 4 types of statutes of limitations in each state.

Be careful about resetting the clock

This is where things can get complicated. Because of the way the law is written, you can actually do things – i.e. take certain actions – that reset the clock. That means the collector has more time to sue you and ask the courts to make you pay – through things like wage or tax refund garnishment.

Here are three things you can do that may reset the statute, depending on where you live:

  1. Acknowledge the debt as yours. If the collector gets you on the phone and you admit that you owe the debt, the clocks can be reset.
  2. Make any payment – even a partial payment – on the debt.
  3. Ignore a notice about a legal suit on the debt.

The first two are where most people get caught. The collector gets you on the phone and you tell them, “Yes, the debt is mine, but I’m not going to pay because…”

You’ve just reset the clock. Now the collector has more time to use garnishment and other court-ordered enforcement actions to make you pay. And for those consumers that just make a partial payment to get a collector to shut up, you’re actually not doing yourself any favors either. Keep in mind, the statute of limitations can be up to 15 years, but sometimes it’s only three.

Note that a cease and desist letter to a collector does not necessarily acknowledge a debt as yours. So, by the FDCPA regulations, you can send the letter that stops any further contact from a collector. You simply tell them that you do not acknowledge the debt and wish them to cease all further contact. If they contact you again except through the courts, they violate the FDCPA. You can seek compensation for collector harassment.

Collection after the statute expires

Now here’s another catch: According to the letter of law as it was established by the Fair Debt Collection Practices Act, the statute of limitations on debt collection only applies a collector’s ability to sue you or file through the court to collect their money.

The way the law is written, a collector can still try to collect even after the statute of limitations expires. They just can’t use the courts or the U.S. legal system to do it. Instead, they try everything they can to get you to pay even though the law says you’re no longer legally obligated. And they won’t tell you that the statute expired, so it’s up to you to know when it does!

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Article last modified on June 26, 2019. Published by, LLC