What Is The Statute Of Limitations On Debt


What Is the Statute of Limitations on Debt?

If you’re struggling with old business debts, knowing the statute of limitations is critical. This legal time limit restricts how long creditors can sue to collect on overdue balances. For Solve Debt Relief and the business owners we work with, understanding these laws is the first step in developing smart debt relief strategies.

Statutes of limitations vary between states and debt types. Generally, they range from 3-10 years. Exceeding the timeframe prevents collectors from filing litigation, but the debt technically remains. There are steps to consider regarding acknowledging or paying on time-barred debts.

This guide covers key questions around statutes of limitations on business and personal debts. We’ll explain how they work, provide examples, and offer tips on engaging with creditors on old accounts while protecting your rights.

The Basics of Statutes of Limitations

A statute of limitations sets a maximum timeframe creditors or debt collectors have to sue for repayment on delinquent accounts. Time limits vary by state and debt type. Once the clock runs out, collectors lose their legal means to pursue old debts through the courts.

However, the debt still exists even if collectors can’t sue. The statute of limitations impacts legal remedies, not the validity of the debt itself. Creditors may still attempt to collect through letters, calls, or other means.

Key Facts About Statutes of Limitations

  • Statutes of limitations vary by state, from 3 years (Kentucky) to 10 years (Maine).
  • The timeframe depends on the type of debt (written contract, open-ended account, etc.).
  • Making a payment or new promise to pay restarts the clock on the statute of limitations.
  • Exceeding the time limit blocks lawsuits but does not erase the debt.
  • Collectors may still try non-litigation tactics to collect on time-barred debts.

Understanding these key facts allows you to make informed choices about acknowledging older debts versus letting the statute of limitations expire.

How Statutes of Limitations Work on Different Debt Types

Not all statutes of limitations are the same. States establish different timeframes on different categories of debts, including:

Written Contracts

Debts tied to a signed agreement with set repayment terms often face the longest statutes of limitations. This includes promissory notes, personal loans, or business loans with a written contract.

For written contracts, statutes of limitations range from 3 years (California) to 15 years (Rhode Island). North Carolina has one of the longest at 10 years.

Open-Ended Accounts

Ongoing credit card, utility, or other open-ended debts tend to have shorter statutes of limitations since there is no single set due date. These range from 3-6 years depending on the state.

For example, New Mexico has a 4-year time limit on open accounts. The clock starts running from the date of last activity or final payment.

Oral Contracts

Debts involving informal, verbal agreements often have statutes of limitations between 3-6 years as well. In Wisconsin, the time limit for oral contract debts is six years.

The date of the last payment or acknowledgment of the debt typically triggers the statute of limitations countdown.

Promissory Notes

Signed promissory notes are another form of written contract debt. Iowa’s statute for promissory notes is 5 years, while Tennessee’s is 6 years.

As with other written agreements, promissory notes often must be acknowledged in writing to restart the statute after a breach.


If a creditor sues and wins a court judgment ordering repayment, that judgment has its own separate statute of limitations. This can range from 5-20 years depending on the state.

For instance, Ohio has an 8-year statute of limitations on collecting judgments. Staying aware of varying time limits is key.

State-by-State Statutes of Limitations

Here is an overview of statutes of limitations by debt type for a sample of different states:

State Written Contract Open Account Oral Contract Judgments
California 4 years 4 years 2 years 10 years
Florida 5 years 4 years 4 years 5 years
Illinois 10 years 5 years 5 years 7 years
Michigan 6 years 6 years 6 years 10 years
New York 6 years 6 years 6 years 20 years

Consulting the specific statutes in your state is important, as debt collection laws can vary significantly. An experienced debt relief attorney can advise on the time limits applicable to your situation.

What Happens When Debt Exceeds the Statute of Limitations

Once the statute of limitations clock runs out, creditors lose the right to sue for repayment on that debt. But some key things to know about the impacts include:

  • The debt itself still exists, even if legal action is time-barred.
  • Collectors may still attempt to collect through letters, calls, etc.
  • Time-barred debts can be reported on your credit report for up to 7 years.
  • Making payments could revive collectors’ litigation rights.

Understanding these implications allows you to make informed choices when collectors come calling about old business or personal debts.

Possible Collector Lawsuits on Time-Barred Debt

Once past the statute of limitations, a collector technically cannot successfully sue in court for repayment. However, that does not always deter collectors from filing suits anyway. Some may bank on debtors being unaware of the time limit or failing to assert it as an affirmative defense.

If sued on time-barred debt, be sure to raise the statute of limitations in your response. The court should dismiss the lawsuit. An attorney can also seek sanctions against the collector for knowingly pursuing litigation past the deadline.

Making Payments on Old Debt

Use caution before making payments on old debts that may be time-barred. In many states, partial payment or acknowledging the debt restarts the statute of limitations.

Collectors may use this to revive the debt and gain more time to sue. Consult a legal advisor before making commitments on aging debts.

Options for Negotiating Old Debt

One option is trying to negotiate debt settlement on the aging amounts. Collectors may accept reduced lump-sum payments simply to get something rather than nothing.

This can resolve old debts through mutual agreement. Again, be very careful about making binding payment offers in writing, which could reset the statute of limitations in some states.

Strategic Guidance from Solve’s Debt Relief Team

The statute of limitations creates important protections on old business and personal debts. But collectors may still use aggressive tactics short of litigation to try collecting.

At Solve Debt Relief, our attorneys can provide experienced guidance. We empower clients to make informed choices on debts that may be time-barred while limiting legal risks. Our strategic advice helps business owners:

  • Determine precisely when statutes of limitations expire
  • Negotiate with collectors from a position of knowledge
  • Dispute invalid or obsolete debts
  • Optimize bankruptcy or settlement outcomes

Don’t let collectors intimidate you into acknowledging debts without understanding your rights. Contact Solve Debt Relief today for clear, actionable debt strategies.

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