Time-Barred Debt and the Statute of Limitations

What makes a debt time-barred

A statute of limitations sets the deadline for filing a lawsuit. For consumer debts, the period is set by state law and depends on the type of contract and sometimes on a choice-of-law clause. Periods commonly range from three to six years, but some are longer.

Federal rule for debt collectors

Regulation F, 12 C.F.R. § 1006.26(b), says a debt collector must not bring or threaten to bring a legal action against a consumer to collect a time-barred debt. The rule does not apply to proofs of claim in bankruptcy. Section 1006.26(a)(2) defines a time-barred debt as one for which the applicable statute of limitations has expired.

Payments and acknowledgments

In some states, a partial payment or a written acknowledgment of the debt can restart or extend the limitations period. Other states limit or bar that result for consumer debts. So before paying anything on an old account, check your state’s law and get any agreement in writing.

Raise it or lose it

The statute of limitations is usually an affirmative defense. If a collector sues on a time-barred debt, the defendant generally must raise it in the answer. A court may not apply it on its own, and a default judgment can be entered even on an old debt.

Credit reporting is separate

The time limit for suing is different from the time limit for credit reporting. A debt can be too old to sue on but still on a credit report, or the reverse. See disputing collection accounts on your credit report.

Debt collection is governed by federal law and state law. State statutes of limitations, licensing rules and court procedures differ, so check your state’s rules and talk to a licensed attorney about an active case.

Researching time-barred debt and the statute of limitations in your state

First, find the statute or rule that governs time-barred debt and the statute of limitations where you live. State law controls most of these questions, so the answer can change from one state to the next. Next, read recent decisions from the appellate courts in your state. They show how judges apply the law today. Also, check the local rules of the court that would hear your case. Our state procedures guide links to each state’s official rules. In addition, the Research Center explains how to confirm a source is still good law.

Sources and further reading

Official sources used on this page:

• law.cornell.edu

Related reading on Lawtopolis:

• Defending a Debt Collection Lawsuit
• Disputing Collection Accounts on Your Credit Report (FCRA)
• Debt Validation Under the FDCPA (15 U.S.C. § 1692g)