Statute of limitations on debt, and the trap that restarts it
Every state limits how long a creditor has to sue you over an unpaid debt. Once that window closes the debt is called time-barred.
Two things about this are widely misunderstood, and both cost people money.
What it does and does not do
It does not erase the debt. You still owe it. It can still appear on your credit report within the reporting period, and collectors can still contact you and ask you to pay.
It does remove the lawsuit. Once a debt is time-barred, a collector cannot sue you over it. Under Regulation F, a collector also cannot threaten to sue over a debt it knows is time-barred.
The defense is absolute, and you have to raise it. This is the part that catches people. If a collector sues on a time-barred debt and you do not show up, the court enters a default judgment against you. The protection existed and you forfeited it by not appearing.
A default judgment can lead to wage garnishment. Never ignore a summons, no matter how old the debt.
How long you have
The window runs from three years to ten depending on the state. Four to six years covers most of the country. Roughly a dozen states use three years. A couple use ten.
We are not publishing a state-by-state table here, and that is deliberate. These limits change with legislation, they differ by the type of agreement involved, and courts sometimes disagree about which limit applies to credit card debt in a given state. A table that is right today and wrong next year is worse than no table, since someone will rely on it to decide whether to respond to a lawsuit.
Find your state’s number from a source that is accountable for it:
- Your state attorney general’s consumer protection office
- Your state’s legal aid organization, most of which publish plain-language guides
- A consumer attorney, many of whom offer free consultations on collection suits
Ask two questions: how long is the limit, and when does the clock start.
When the clock starts
Most states run it from your last payment or the date you first fell behind. Which one applies varies, and the difference can be months.
Choice-of-law clauses complicate this further. Some card agreements specify another state’s law, and courts do not always enforce those clauses the same way. This is one more reason to get your answer from someone accountable rather than from a chart.
The trap
In most states, making a payment restarts the clock from zero. Any payment. Ten dollars on a six-year-old debt can hand a collector a fresh window to sue you for the full balance.
In some states, acknowledging the debt in writing does the same thing. In others, so does a written promise to pay.
This is not obscure. Collectors sometimes call about very old accounts and ask for a small good-faith payment, or offer a settlement that requires a token payment to begin. The payment revives their ability to sue.
Before paying anything toward an old debt, find out how old it is and what your state’s rule says. A collector has no obligation to volunteer that the debt is time-barred.
What to do if you are contacted about an old debt
Do not confirm the debt or agree to pay on the call. Ask for everything in writing.
Request validation in writing. Ask for the original agreement, a full accounting, proof of ownership, and the date of last payment. That date is what determines everything.
Check your state’s limit against the date of last payment.
If it is time-barred and you are sued anyway, respond by the deadline and raise the statute of limitations as a defense. Consumer attorneys often take these cases on contingency, since suing on time-barred debt can itself violate federal law.
If it is time-barred and you want to pay it, that is a legitimate choice. Understand you are likely reviving the lawsuit window, and get any settlement in writing first.
The short version
Old debt eventually becomes unsuable. Making a payment can undo that protection completely.
Find out your state’s limit and your date of last payment before you agree to anything.
Sources
- Consumer Financial Protection Bureau guidance on time-barred debt
- Regulation F, 12 CFR Part 1006, on suits and threats of suit over time-barred debt
- Limits and start dates are set by state law and vary. Verify yours with your state attorney general or a consumer attorney