What is the statute of limitations on debt?
All consumer debts, from credit card balances聽to medical bills, have limits on the number of years creditors have a legal right to sue you for payment.
After the聽statute of limitations on debt passes, the debt聽is considered 鈥渢ime-barred鈥� and you can鈥檛 legally be sued 鈥� but collectors may still try. Your obligation to pay, however, stays on the books.聽That means that future creditors will see it, which can make it harder for you to get new lines of credit, and the ones you do get will likely have higher interest rates.
Statutes of limitations vary from state to state and by type of debt, so it鈥檚 tricky to pin down for one聽specific debt. Tread carefully if debt collectors are hounding you, because making even one payment on an expired debt can reset the clock and revive the creditor鈥檚 ability to sue you.
Here鈥檚 an explainer of the statute of limitations on debt and what to do if you鈥檙e being pursued for a debt that鈥檚 time-barred.
How to tell if a debt is time-barred
Generally, state law where you live determines the statute of limitations on specific debts, even if you incurred the debt elsewhere. In some states, credit card debt is time-barred after three years. In others, it鈥檚 up to 10.
However, some creditors add clauses to their agreements saying a specific state鈥檚 laws will govern the contract regardless of where the customer lives.
鈥淒etermining if a debt is past its statute involves looking at what type of debt it is and what statutes are applicable,鈥� says Colin Hector, staff attorney at the Federal Trade Commission. 鈥淵ou need some legal acumen, so you may want to check with legal aid, an attorney or a state鈥檚 attorney general office.鈥�
These sources can help you find the statute of limitations on debts you face. The best option for you depends on your time and budget:
- : Can provide free legal information but may be hard to reach.
- : Inexpensive, but their attorneys and paralegals are often overbooked and overworked.
- : Can offer personalized and faster help but at a higher cost.
Getting information from the collector
Debt collectors have a legal obligation to give you information about the debt they鈥檙e attempting to collect. Asking for details can help you determine if a debt is past its statute of limitations.
Be careful when you talk with collectors. Don鈥檛 promise to make a payment or give them聽any payment information, such as a bank account, because they may take that as acceptance of the debt.
IF YOU RECOGNIZE THE DEBT AS ONE YOU TOOK OUT
Collect all information you have on it, such as the amount, any payments you made and the date of your last payment. This serves as your arsenal against the debt collectors.
Ask the collector two simple questions:
- Is the debt time-barred?
- When was the date of the last payment?
If the debt collectors answer the first question, they鈥檙e required by the聽聽to answer it聽truthfully 鈥� however, they鈥檙e not required to聽answer it聽at all.
If the collector doesn鈥檛 answer, ask about the date of the last payment. The clock on the statute of limitations starts when an account goes delinquent, typically 30 days after you miss a payment. If you haven鈥檛 made any payments, the clock may聽have started when you took out the debt or when it was marked delinquent, depending on your state.
If a debt collector won鈥檛 reveal this information, refer to the debt validation letter. A collector must send you this letter within five days of first contact; if you haven鈥檛 received it within 10 days, ask聽for it. This notice should include the amount owed, the date of the last payment, the collector and how to request information on the original creditor.
IF YOU DON鈥橳 RECOGNIZE THE DEBT
The debt collection industry is notorious for attempting to collect debts from the wrong people. As debts are sold by the original creditor to a third party and possibly sold again, a debt collector will likely have less and less complete information. As a result, you may be contacted to pay a debt that鈥檚 not yours at all.
Refer to your own records and the validation letter to clarify any discrepancy. This will help you determine if you should challenge the debt.
Next steps
Understanding the statute of limitations on your debt is a first step toward taking control of your financial obligations.
From there, you can decide聽. You can pay off the debt, challenge it, discharge it through bankruptcy or ignore it. The best option for you depends on your circumstances. Take your time making聽a decision.
Along with聽, getting your debts in order can prepare you for a bright financial future.
Sean Pyles is a staff writer at NerdWallet, a personal finance website. Email:聽spyles@nerdwallet.com.
This story originally appeared on .
