Key takeaways
- The statute of limitations varies from state to state and is the law that limits the amount of time in which debt collectors can sue you for unpaid debt.
- You aren't legally required to repay debt that has passed the statute of limitations in your state. However, you may need to appear in court to prove the debt has expired.
- Never give personal information or pay over the phone if a debt collector contacts you. Rather, ask for the debt collection notice they're required to give you within a 5 day period.
The amount of time that a debt collector can legally pursue old debt varies by state and type of debt but can range between three and 20 years. Each state has its own statute of limitations on debt, and after the statute of limitations has expired, a debt collector can no longer sue you in court for repayment. However, in many places, debt collectors can still try to collect on old debts beyond the expiration of the statute of limitations.
If you’re like most Americans right now and have old credit card debt that you haven’t paid off — or if you’re currently getting calls from a debt collector — it’s important to know your rights so you can spot shady behavior when you see it.
Statute of limitations on debt collection by state
The statute of limitations is a law that limits how long debt collectors can legally sue consumers for unpaid debt. The statute of limitations on debt differs by state and type of debt, ranging from three years to as long as 20 years.
Below is a map of each state’s statute of limitations on different types of debt to help get you started — but be aware that credit card issuers sometimes argue in court that the law in their home state (not yours) is what should apply.
In the map below:
- Written contracts are those debts that are associated with a contract you signed, even if the contract itself is informal (such as a few notes jotted down on paper between neighbors).
- Oral contracts are debts for which no written contract was created, but verbal promises of repayment were made.
- Debts secured by promissory notes have a specific type of contract in place (the “promissory note”) that defines the number of payments to be made, the timing of those payments and the interest they incur. Promissory notes are common for mortgages, student loans, personal loans and other formal debt arrangements.
- Open-ended accounts include revolving credit accounts that can be borrowed from, repaid and borrowed from again (such as credit cards or lines of credit).
It’s also important to note that case law and state regulations on statutes of limitation are always evolving and often have more nuance than can be displayed in a single table. For example, revisions made to Kentucky state law in 2014 changed the limitations period that applies to written contracts — including credit card applications — signed by the state’s consumers. In Vermont, the statute of limitations for debts secured by promissory notes is 14 years — unless the signing of the note was not witnessed, in which case the limitation is six years.
For this reason, it’s always best to consult with an attorney in your state to understand which statutes of limitation, if any, apply to your situation.
How does debt collection work?
Generally, the earliest phases of the debt collection process begin to kick in about 30 days after a payment’s due date has passed and payment has not been made — the point at which the debt is marked as delinquent. Consumers may start to receive calls or notices from the creditor at this point, but debt collection activities may escalate if the creditor can’t reach you.
“Later, often around 180 days after the original due date of the payment, the creditor might sell the debt to a collections agency,” says Michael Micheletti, CMO with Unlock Technologies. “This step indicates that the creditor has decided to give up on obtaining payment on its own, and selling the debt to a collection agency is a way to minimize the creditor’s loss.”
At this point, you’ll likely start to hear from the debt collector. Neither the debt nor the payment has changed, but another entity — the debt collector — now has the right to collect the payment.
“Debt collectors are companies that collect unpaid debts for others,” says April Lewis-Parks, director of education and corporate communications at Consolidated Credit. “It’s usually more cost-effective for companies to hire debt collectors than to continue to spend their own time and staff pursuing payment on delinquent accounts.”
How long can someone collect a debt?
Depending on the state, debt collectors may still pursue you even after the statute of limitations has elapsed — the time when your debt is considered “time-barred.”
“In some states, a debt collector is not allowed to try and collect on the debt if the debt has gone past the time limit for the state’s statute of limitations. In others, even though a debt collector can’t sue, they can still work to collect on the debt indefinitely,” says Micheletti.
These cases are becoming more common because lenders are increasingly selling off debts they’ve removed from their books for pennies on the dollar to third-party collection agencies who try to collect, even though the statute of limitations has run out.
If you’re being sued over a debt that’s outside of its statute of limitations, you may need to appear in court and prove that the debt is too old to collect. Don’t skip your court date because you believe you can’t legally be forced to pay an old debt. If you don’t appear in court and defend your case, a judge may rule in favor of the debt collector.
Also be wary of making payments on your debt or entering into a payment agreement with your creditor — doing so could reset the statute of limitations on your debt and make it legal again for debt collectors to sue.
What happens if you are being pursued by a debt collector after the statute of limitations has expired?
Consumers have many protections on debt collection activities, particularly after the statute of limitations has expired. There are three big reasons why you shouldn’t immediately claim responsibility for whatever debt a collector says you owe:
- Old debts have often been passed from one collection agency to another, and it’s very easy for debt collectors to make a mistake.
- In some cases, claiming the debt can reset the statute of limitations. If you’ve got an expired debt, the last thing you want to do is make it fresh again.
- The person calling you might be a scam artist. Debt collection scams exist, so make sure you don’t end up paying a fake debt collector money that you don’t actually owe.
Never make a payment, give out personal information over the phone — including information about the debt — or confirm the debt is yours. Instead, the Federal Trade Commission suggests telling the debt collector that you aren’t going to discuss any debts until you receive your written validation notice.
Debt collectors are required to provide you with a written notice within five days after first contacting you about a debt that includes the name of the original creditor and the amount owed, as well as your rights under the federal Fair Debt Collection Practices Act.
“It’s critical to verify the information. Just as a creditor sold the debt to a debt collector to begin with, one debt collector may have sold the debt on to another. Along the way, errors could be made. A consumer should verify, at the least, that the debt does belong to them,” continues Micheletti.
You also have the right to send a “cease communication” letter to the collection agency. After you’ve sent this letter, the agency must stop calling you about your debt, except to confirm that it has received the letter and will stop contacting you or to inform you about a specific action it is taking against you (such as filing a lawsuit).
Can debt collectors sue you?
Typically, debt collectors will only pursue legal action when the amount owed is in excess of $5,000, but they can sue for less.
“If they do sue, you need to show up at court,” says Lewis-Parks. “If you don’t show up, the court will probably issue a judgment against you for the amount that the debt collector is suing you for. The debt collector can also attempt to find out where you work and garnish your wages. They can try to find out where you bank too, and freeze your accounts.”
Any court judgments will be added to your credit report and remain there for seven years, even if you pay the judgment, says Lewis-Parks. If you discover that you have a judgment against you, it’s a good idea to speak with a consumer law attorney to determine what rights you may have and whether you can get the judgment removed.
You should also be aware of your rights under the Fair Debt Collection Practices Act. According to the FTC, debt collectors are not allowed to call you after 9 p.m. or before 8 a.m., and they are not allowed to call your workplace if you have told them verbally or in writing that your employer does not allow such calls.
If a debt collector does sue you, there are a number of actions you may want to consider beyond hiring a consumer law attorney. Filing for bankruptcy or attempting to negotiate a settlement with the debt collector may both be appropriate paths for resolving your financial challenges.
Should you pay your debts after the statute of limitations has expired?
If you’re wondering how long an unpaid debt lasts, there are varying opinions on this question. Some people argue that once a debt is no longer within the statute of limitations, it doesn’t need to be paid off. Others feel a moral obligation to pay off all of their outstanding debts, even if they can no longer be sued for failure to pay. There are also credit score impacts to consider.
“If you don’t make payments on your debt, it can still affect your credit for up to seven years, regardless of when the statute of limitations ends,” says Katie Ross, executive vice president of American Consumer Credit Counseling. A big hit like this will affect your ability to qualify for personal loans, mortgages and credit cards.
Ross suggests devising a repayment plan. But remember, if you start making payments again on old debt, the clock on the statute of limitations surrounding that debt starts anew, opening you up to being sued for the money owed, so this approach should be considered carefully.
“I would never pay a debt after the statute of limitations has expired because legally I do not owe the money,” says Ash Exantus, founder of BookRich. “You should simply contest the debt if it’s on your credit report and begin building new credit.”
It’s also important to remember that when outstanding debt gets old enough, it falls off your credit report and will no longer be an issue. Most unpaid and delinquent debt disappears from your credit report after seven years — and if it doesn’t vanish on its own, you can ask the credit bureaus to remove your old debt from your credit history.
If you have old credit card debt that is still within the statute of limitations, it’s a good idea to try to pay it off if you’re able. Consider transferring your old debt to a balance transfer credit card so you can use the card’s interest-free grace period to make payments on that balance.
“If you’re struggling to pay off your debt on your own, a nonprofit credit counseling agency may be able to help,” says Ross. “They can help you create a budget and may enroll you in a debt management program that can help you pay off debt faster and save a bit more money than you would if you tried to pay the debt off on your own.”
Other options may include credit card and debt relief programs, initiating a conversation with the creditor or collection agency to establish a manageable repayment plan or settling on a lower total amount owed. But if you’re not comfortable doing that, another option may be a type of personal loan known as a debt consolidation loan.
“A personal loan will generally offer a rate lower than credit cards,” says Micheletti. “A consumer could consolidate their credit card debt into one personal loan at the lower rate. If going this route, the consumer should use 100 percent of the proceeds from the loan to pay off outstanding debts in order for this option to be effective.”
The bottom line
Going through the debt collection process isn’t fun, but you do have options — and it doesn’t mean your financial future will be tarnished forever. If you’ve been contacted by a debt collector, it’s important to take the time to confirm that the debt is actually yours, that the debt collector is legitimate and that you’re still within the relevant statute of limitations of debt collection.
You’ll also want to educate yourself on your rights within the debt collection process, including when, where and how frequently debt collectors can contact you. Once you’ve armed yourself with this information, you can begin making a plan to resolve your situation — whether that means paying the debt, negotiating a settlement, waiting for it to expire or taking some other step.
No matter which route you choose, monitor your debt’s timeline and understand your options and their potential impact on your long-term financial picture. A financial advisor or consumer law attorney may be especially helpful in this process.
