Statute of Limitations on Debts
Below are the State Statutes of Limitations for various kinds of agreements. All figures are in years.
Oral Contract: You agree to pay money loaned to you by someone, but this contract or agreement is verbal (i.e., no written contract, "handshake agreement". Remember a verbal contract is legal, if tougher to prove in court.
Written Contract: You agree to pay on a loan under the terms written in a document, which you and your debtor have signed.
Promissory Note: You agree to pay on a loan via a written contract, just like the written contract. The big difference between a promissory note and a regular written contract is that the scheduled payments and interest on the loan also is spelled out in the promissory note. A mortgage is an example of a promissory note.
Open-ended Accounts: These are revolving lines of credit with varying balances. The best example is a credit card account. Please note: a credit card is ALWAYS an open account. This is established under the Truth-in-Lending Act:
TITLE 15 > CHAPTER 41 > SUBCHAPTER I > Part A > § 1602
§ 1602. Definitions and rules of construction(i) The term “open end credit plan†means a plan under which the creditor reasonably contemplates repeated transactions, which prescribes the terms of such transactions, and which provides for a finance charge which may be computed from time to time on the outstanding unpaid balance. A credit plan which is an open end credit plan within the meaning of the preceding sentence is an open end credit plan even if credit information is verified from time to time.
Why should you care about the Statute of Limitations (SOL)
When does the Statute of Limitations start on a debt?
For Statutes of Limitations on judgments, go here.
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State
Oral
Written
Promissory
Open-ended Accounts
State Statute: Open Accounts
AL
6
6
6
3
§6-2-37
AR
5
5
5
3
§16-56-105
AK
6
6
3
3
§09.10.053
AZ
3
6
6
3
§12-543
CA
2
4
4
4
§337
CO
6
6
6
3
§13-80-101
CT
3
6
6
3
§52-581
DE
3
3
3
4
§2-725
DC
3
3
3
3
§12-301
FL
4
5
5
4
§95.11
GA
4
6
6
4
§9-3-25
HI
6
6
6
6
HRS 657-1(4)
IA
5
10
5
5
§614.5
ID
4
5
5
4
§5-222
IL
5
10
10
5
735 ILCS 5/13-205
IN
6
10
10
6
§34-11-2
KS
3
6
5
3
§84-3-118
KY
5
15
15
5
§413.120
LA
10
10
10
3
§3-118
ME
6
6
6
6
§5-511
MD
3
3
6
3
§5-101
MA
6
6
6
6
c.260, §2
MI
6
6
6
6
§600.5807
MN
6
6
6
6
§541.05
MS
3
3
3
3
§15-1-29
MO
5
10
10
5
§516.120
MT
3
8
8
5
27-2-202
NC
3
3
5
3
§1-52(1)
ND
6
6
6
6
28-01-16
NE
4
5
5
4
§25-206
NH
3
3
6
3
382-A:3-118
NJ
6
6
6
3
25:1-5
NM
4
6
6
4
§37-1-4
NV
4
6
3
4
NRS 11.190
NY
6
6
6
6
§2-213
OH
6
15
15
6
§2305.07
OK
3
5
5
3
§12-3-95
OR
6
6
6
6
§12.080
PA
4
4
4
4
§5525
RI
10
5
6
4
§6A-2-725
SC
3
3
3
3
SEC 15-3-530
SD
6
6
6
6
§15-2-13
TN
6
6
6
3
28-3-105
TX
4
4
4
4
§16.004
UT
4
6
6
4
78-12-25
VA
3
5
6
3
8.01-246
VT
6
6
5
3
§3-118
WA
3
6
6
3
RCW 4.16.080
WI
6
6
10
6
893.43
WV
5
10
6
5
§55-2-6
WY
8
10
10
8
§1-3-102
Why should you care about the Statute of Limitations (SOL)?
Every day, consumers pay off collection accounts and charge-offs which they do not have to pay off because the Statute of Limitations has already expired for the open account. Consumers pay off these accounts because the accounts still appear on their credit reports.
This information can be a powerful weapon in unburdening yourself of old debts, as creditors have a limited time in which to sue you. Remember: the Statute of Limitations begins to run from the day the debt - or payment on an open-ended account - was due. Also, this has nothing to do with how long an negative credit item can remain on your credit report. To view these credit reporting rules, click here.
Consumers also pay off these accounts when they are not on their credit reports. Even though an account was removed from their credit file, a collector watched their credit report for any activity (actually the computer was watching any credit activity). When the collector spotted the activity, he called the consumer for payment. All the consumer needed to say to the collector was, "I have an absolute defense--the Statute of Limitations has expired."
The Statute of Limitations does not cause your debt to go away after it expires. If the creditor files suit, the consumer has an absolute defense. The consumer must offer the new evidence to avoid a judgement. The evidence will consist of papers the consumer files to support his claim. If the creditor sues you, and you do not prove to the court that the Statute of Limitations expired, you will have a lost lawsuit and a judgment against you.
When does the Statute of Limitations start?
You might be asking yourself, "It has been such a long time since my "open account" has had any activity. When does my Statute of Limitations started ticking." Use your credit report as a reference. Your credit report will tell you the date of last activity for your account. You will have your credit report with the date of last activity and a certified letter stating that the statute of limitations expired.
Depending on what state you live in, if you make a partial payment, you could be postponing the Statute of Limitations' taking effect on your collection account or charge-off. A collector might call you one day and say you waived your rights when you made a deal with the collection agency. Do not take anything a collector tells you for granted. Make them prove it to you, in or out of court. For about half the population, the Statute of Limitations started ticking the day they made the last payment for their account.
What state should I use in figuring out the Statute of Limitations?
According to Ron Opher, of ron4law.com: In my opinion, the FDCPA applies, and so the only relevant jurisdictions are where the consumer signed the loan application and where the consumer currently lives (bank location is irrelevant). If those states are different, I believe the creditor has the choice of where to sue and can select the state with the longer SOL. There may also be an argument that the contract was signed "under seal" which might lead to a longer Statute of Limitations than an ordinary contract.
Summation:
Even though a debt is an absolute promise to pay, if the Statute of Limitations expiring is in force and the creditor tries to force you to pay the debt, you have the right not to fulfill the promise (debt).
However, a question arises when it comes to CC. If its an open account, how in the heck can you get your state courts to see it that way? Here in Arizona they are considered written...
10-29-2007, 12:01 PM
Statute of Limitation on Debts. State by State.
. Remember a verbal contract is legal, if tougher to prove in court.
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