As we all know, debt does not get better with time. Technically though, debt does have an expiration date. Debt is subject to a statue of limitations, which limits the amount of time a creditor has to collect on the debt owed to them. This can vary by state and by the type of debt in question, but can range from anywhere to 2 to 10 years.
What is a Statue of Limitations?
A statue of limitations essentially is a statue prescribing a set time period in which legal action can begin in a given case. In terms of debt, this is the amount of time a creditor has to sue to recoup an unpaid balance.
Can you still sue after the statue of limitations has passed?
While technically you can still sue for a debt that has passed its statue of limitations, the debtor can use the statue as a defense. In most cases, assuming the debtor shows up to court, this will be sufficient for them to win any litigation. This means the only chance you have is the debtor not answering the suit.
Can you still receive payment after the statue of limitations has passed?
While you no longer have the power of the court to back your collection effort, creditors can still pursue a debt outside the statue of limitations. In these cases, your best course of action is to try to appeal to the debtors sense of moral obligation or reputation.
Is it possible to restart the statue of limitations?
Yes, if a debtor takes certain actions they can actually restart the clock and give a creditor more time to use the court to force the debtor to pay the account. The debtor could potentially restart the clock on the statue of limitations if they:
- acknowledges to you that they owe the debt
- makes a payment on the debt
- enters a payment plan
- makes an agreement to pay
- makes a charge on the account
- accepts a settlement offer
What does this mean for creditors?
It rarely impacts the collection process in any meaningful way. If a debt is going to be collected, it most likely will be collected long before the statue of limitations becomes relevant.
Statue of Limitations by state and type of debt
If you do find yourself in a situation where the statue of limitations becomes relevant, here is a break down of how long you have to collect.
|State||Written (Years)||Oral (Years)||Open-ended Accounts (Years)|
|Georgia||6||4||4 or 6|
|Illinois||10||5||5 or 10|
|Kentucky||15||5||5 or 15|
|Oklahoma||5||3||3 or 5|
*In most cases, the statue of limitations extends from either the date of last payment or the date of the first missed payment.