Ohio Collection Laws

What are Ohio's collection laws, and what rights do creditors and debtors have in Ohio?

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Bill's Answer: Answered by Mark Cappel

A collection agent or law firm that owns a collection account is a creditor. A creditor has several legal means of collecting a debt. But before the creditor can start, the creditor must go to court to receive a judgment. See the Bills.com resource Served Summons and Complaint to learn more about this process.

The court may decide to grant a judgment to the creditor. A judgment is a declaration by a court that the creditor has the legal right to demand a wage garnishment, a levy on the debtor's bank accounts, and a lien on the debtor's property. A creditor that is granted a judgment is called a "judgment-creditor." Which of these tools the creditor will use depends on the circumstances. We discuss each of these remedies below.

Wage Garnishment

The most common method used by judgment-creditors to enforce judgments is wage garnishment. A judgment-creditor contacts your employer and requires the employer to deduct a certain portion of your wages each pay period and send the money to the creditor.

Wise Advice In most states, creditors may garnish between 10% and 25% of your wages, with the percentage allowed determined by state law. Garnishment of Social Security benefits or pensions for consumer debt is not allowed under federal law, but may be allowed for child support. See the Bills.com Wage Garnishment article to learn more.

In Ohio, wage garnishment is allowed under O.R.C. § 2716.07. If the judgment-creditor is aware of the debtor's place of employment, it may seek wage garnishment. Under Ohio law, the garnishment applies to 25% of the debtor's net take home pay, (i.e., gross pay less statutorily mandated deductions). Garnishment can occur only after the person being garnished has received a 10-day's notice.

However, under Ohio law, you also may contact a budget and debt counseling service described in division (D) of O.R.C. § 2716.03 for the purpose of entering into an agreement for debt scheduling. There may not be enough time to set up an agreement for debt scheduling to avoid a garnishment of your wages based upon this demand for payment, but entering into an agreement for debt scheduling might protect you from future garnishments of your wages. Under an agreement for debt scheduling, you will have to regularly pay a portion of your income to the service until the debts subject to the agreement are paid off. This portion of your income will be paid by the service to your creditors who are owed debts subject to the agreement. This can be to your advantage because these creditors cannot garnish your wages while you make your payments to the service on time.

Levy Bank Accounts

A levy means that the creditor has the right to take whatever money in a debtor's account and apply the funds to the balance of the judgment. Again, the procedure for levying bank accounts, as well as what amount, if any, a debtor can claim as exempt from the levy, is governed by state law. Many states exempt certain amounts and certain types of funds from bank levies, so a debtor should review his or her state's laws to find if a bank account can be levied. Some states call levy attachment or garnishment.

In Ohio, levy is allowed under O.R.C. § 1304.80. As used in this section, "creditor process" means levy, attachment, garnishment, notice of lien, sequestration, or similar process issued by or on behalf of a creditor or other claimant with respect to an account. Under O.R.C. § 2329.66, $425 is exempt from account garnishment.

This applies to creditor process with respect to an authorized account of the sender of a payment order if the creditor process is served on the receiving bank. For the purpose of determining rights regarding the creditor process, if the receiving bank accepts the payment order, the balance in the authorized account is deemed to be reduced by the amount of the payment order to the extent the bank did not otherwise receive payment of the order, unless the creditor process is served at a time and in a manner affording the bank a reasonable opportunity to act on it before the bank accepts the payment order.

If you reside in another state, see the Bills.com Account Levy resource to learn more about the general rules for this remedy.

Lien

A lien is an encumbrance -- a claim -- on a property. For example, if the debtor owns a home, a creditor with a judgment has the right to place a lien on the home, meaning that if the debtor sells or refinances the home, the debtor will be required to pay the judgment out of the proceeds of the sale or refinance. If the amount of the judgment is more than the amount of equity in your home, then the lien may prevent the debtor from selling or refinancing until the debtor can pay off the judgment.

Under Ohio law, property liens are an allowable method available to a creditor for payment of debtor obligations. Please see O.R.C. § 118.20, Authorizing Debt Obligations, for a discussion on property liens. See also the reader comments below for a discussion on liens and foreclosure.

If you reside in another state, see the Bills.com Liens & How to Resolve Them article to learn more.

Ohio Statute of Limitations

Each state has its own statute of limitations. Ohio has the most creditor-friendly statutes of limitations in the country. According to O.R.C. § 2305.07 Contract not in writing, and O.R.C. § 2305.06, the statute of limitations for an oral contract is 6 years, a written contract is 8 years. (Effective September 28, 2012, the statute of limitations decreased from 15 years to 8 years after the cause of action accrued.)

When it comes to credit card accounts, some courts apply Ohio's "open account" statute of limitations, which is 6 years (O.R.C. § 2305.07). Other Ohio courts use the written contracts rule, which is 15 years for actions accruing before Sept. 28, 2012, and 8 years for actions accruing after Sept 28, 2012 (O.R.C. § 2305.06 as per SB 224). Others use Ohio's Retail Installment Sales Act, which sets the limit at 4 years (O.R.C. § 1302.98 and O.R.C. § 1317.01). This means that when a local court chooses a credit card statute of limitations, instead of relying on binding precedent from higher level courts (called stare decisis in the legal field), judges seem to apply the rule argued most persuasively by the two parties.

The Ohio Bar Association published a document indicating in passing the statute of limitations for Ohio credit card debt is 6 years, although this is not authoritative or a document one could cite to a court.

A judgment from an Ohio court is valid for 5 years, and then becomes dormant unless revived by the judgment-creditor (O.R.C. § 2329.07). Once dormant, the judgment-creditor has 10 years to revive an Ohio judgment (O.R.C. § 2325.18(A)). Ohio gives non-Ohio judgments full faith and credit after the foreign judgment is filed in an Ohio state court. Once filed, the time-limit rules for foreign judgments are the same as Ohio judgments (O.R.C. § 2329.021 through 2329.027).

The statute of limitations for recovering a deficiency balance relating to a mortgage foreclosure is 2 years, according to O.R.C. § 2329.08.

The statute of limitations for a promissory note is 6 years after the due date, or if accelerated, within 6 years after the accelerated due date (O.R.C. § 1303.16).

Wise Advice Collection agents violate the FDCPA if they file a debt collection lawsuit against a consumer after the statute of limitation expired (Kimber v. Federal Financial Corp. 668 F.Supp. 1480 (1987) and Basile v. Blatt, Hasenmiller, Liebsker & Moore LLC, 632 F. Supp. 2d 842, 845 (2009)). Unscrupulous collection agents sue in hopes the consumer will not know this rule.

Ohio Statutes of Limitations & Other State’s Statutes of Limitations

Ohio enacted a "borrowing statute" where if the default was prior to April 7, 2005, no cause of action that accrued in another state may be maintained in Ohio if the statute of limitations expired in the other state. This is important in lawsuits where creditors base the statute of limitations on a written contract that expressly designates its terms are governed by non-Ohio state law (O.R.C. § 2305.03(B)).

See the Bills.com resource Collection Laws and the Statute of Limitations for the rules in other states.

Ohio Post-Judgment Interest

If Ohio courts cannot find a post-judgment interest rate in the contract between the parties, they will use the statutory interest rate, which varies. Ohio Revised Code Chapter 1343 sets the statutory limitations to the interest that may accrue on written instruments and judgments. The Ohio judgment interest rate varies, and is set according to O.R.C. § 5703.47. The interest rate used for Ohio judgments, in cases where the rate is not set in the contract between the parties, is also the interest rate used for delinquent Ohio taxes. The Ohio tax commissioner publishes the Ohio Annual Certified Interest Rates.

The parties must make the calculation using simple interest on judgments unless there is a specific agreement or statutory provision requiring the payment of compound interest (Mayer v. Medancic, 124 Ohio St.3d 101, 2009-Ohio-6190).

Foreclosure

Ohio foreclosure laws are found in O.R.C. § 323.28. To learn more about the rules surrounding foreclosure in this state, including deficiency balances, please see O.R.C. § 5721.192. If the proceeds from a sale of a parcel under O.R.C. § 5721.19 or O.R.C. § 5723.06 are insufficient to pay in full the amount of the taxes, assessments, charges, penalties, and interest which are due and unpaid; the costs incurred in the foreclosure proceeding, the foreclosure and forfeiture proceeding, or both foreclosure and forfeiture proceedings which are due and unpaid; and, if division (B)(1) or (2) of O.R.C. § 5721.17 is applicable, any notes issued by a receiver pursuant to division (F) of O.R.C. § 3767.41 and any receiver's lien as defined in division (C)(4) of O.R.C. § 5721.18, the court may enter a deficiency judgment for the unpaid amount as authorized by O.R.C. § 5721.17, O.R.C. § 5721.19, O.R.C. § 5723.05, and O.R.C. § 5723.18.

Recommendation

If you receive an Ohio summons for a consumer debt, read the Ohio Bar Association's Responding to a Debt Collection Lawsuit. Then consult with an Ohio attorney experienced in civil litigation to get precise answers to your questions about liens, levies, and garnishment in Ohio.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

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Comments (94)


Joe K.
Springfield, OH  |  March 05, 2014
I am writing in response to a letter I received from an attorney trying to collect on an auto loan from over 15 years ago. The judgement was entered against me in feb. 1999. However, the case was revived last year. My nam eis misspelled on the documentation. Do they still have a case against me? Do I have to pay this? Can I use the SOL as a defense since it was revived?
Bills.com
March 10, 2014
Judgment revival laws are tricky. Consult with a lawyer who has consumer law experience to learn if the judgment was revived properly, and what if any liability you have for the judgment.
Will S.
Perkins Twp, OH  |  February 03, 2014
I received a notice from a collection agency regarding a land line in which they state the original debt date was 4/19/2008. Assuming 90 days, that would put the the date around 1/19/2008. They seem shady in that wouldn't report me if I paid half the account. Which I didn't. But after 8+ years, I am sure that I have already been reported. That being said, what is the real SOL for this case. I have seen many different quotes. I plan on sending a C&D letter if this outside of the SOL.
Bills.com
February 04, 2014
Utility contracts are almost always written contracts. In Ohio, the statute of limitations for written contracts is 8 years for contract breaches (the start of payment delinquency) that occur after September 28, 2012. But if your breach (payment delinquency) started before that date, the statute of limitation is 15 years.

You mentioned the default occurred in January 2008. The 15-year rule applies. The 15-year clock started in 2008, and will run out in January 2023.

What to do? Validate the debt. A debt that cannot be validated cannot be collected. If the collection agent is willing to settle, make sure to get a settlement offer in writing.
Nicole C.
Copley Twp, OH  |  January 10, 2014
A friend of mine has been sued by Landmark National in an Ohio court alleging he owes them money from credit card debt with First Merit Bank. One of the questions he has is what the Plaintiff has to prove. While we have found information on the Internet, none of it can be cited with the court. Can anyone give the name of a specific case or statute?
Bills.com
January 10, 2014
Please read the Bills.com article How to Answer a Summons & Complaint. On that page is a link to an Ohio county court's document entitled "Instructions For Preparing And Filing An Answer To A Complaint". The Bills.com and the Ohio's court's documents will help you get started. If you or your friend get stuck, contact your local Legal Aid Society office.
Scott D.
Franklin Twp, OH  |  January 06, 2014
I have a collection agency that calls me 5 - 6 times a day 7 days a week. They told me the debt was from 2002. That was 12 years ago. What are the statute of limitation when it comes to them contacting me on this debt? 12 years is a long time. They claim they got this phone number from a document. What document, since the phone is not in my name?
Bills.com
January 06, 2014
I will assume you are an Ohio resident. There is no statute of limitations on how long a collection agent may attempt to collect a delinquent debt from an Ohio resident.

The next time the collection agent calls, ask for the address of his or her employer. Then send the collection agent a cease communications notice using USPS Certified Mail, return receipt requested and a copy of the same letter using regular old first class mail. Keep a copy of the letter, and make sure you keep the record of the receipt.

If the calls continue, then the collection agent violates the Fair Debt Collection Practices Act. Violation of the FDCPA gives you the right to file a lawsuit against the collection agent. Consult with a lawyer who has consumer law or FDCPA litigation experience when a collection agent violates the FDCPA.
Robert B.
Pittsburgh, PA  |  December 30, 2013
I won a judgement against a moving company. They have not paid. I found the company through a website, and the website told me they have the company's bank account information that I have the judgement against. They will not release this information to me without a subpoena. How would I go about getting one?
Bills.com
January 03, 2014
It is really easy to muck-up a judgment by trying to collect on it without knowing all of your state's remedies laws. Get help from a pro. You indicated you reside in Ohio. Consult with an Ohio lawyer who has experience in civil litigation. He or she will guide you through Ohio's collections laws.
Matthew P.
Van Buren, OH  |  December 15, 2013
My wife started a "sole proprietorship" business in 2004. She paid and collected sales tax for the State of Ohio for two years after being told by her accountant that she had to collect it. Her business is exempt from collecting sales tax, so she stopped collecting it in middle 2006. The last forms sent to the state regarding taxes were accidentally overlooked and the taxes were not paid. Now, seven years later, an attorney for the Ohio Attorney General has contacted us. They have taken a small balance and turned it into a massive nbalance from "penalties and interest". She does not dispute that she owes, just the amount. So, long story short, she has drafted a sympathy letter and offered to pay more than half of what they say is due, and the collection attorney was to forward this to the OAG. Here are my questions...this lawyer says he can put a lien on our jt sup home for my wifes debt, actually he says it has already been done - although I do not see it on my credit report or at the county office. What are the attorneys options? We are willing to pay this debt, but if interest and penalties keep accumulating, it will never be satisfied. We have a large cash amount to give right now, but if the OAG and tax dept reject the offer, we have little options other than to pay monthly to satisfy it. Just some guidelines, mainly on our home and the lawyers options would be great.
Bills.com
December 23, 2013
Tax questions like yours are very difficult for Bills.com to answer. One small fact in a tax question can change the analysis completely. The best person for you to consult with is a lawyer who has tax experience in your state. I would strongly recommend a lawyer in light of your accountant's advice, and the unsettled tax exempt status of the business. Just because someone at the Ohio tax authority says the business is or is not exempt does not make that status a fact.
Jill M.
Springboro, OH  |  December 04, 2013
I have a judgment that was filed in 9/2008 and lists the status as "pending". Any ideas on what might happen next?
Bills.com
December 04, 2013
I will assume you reside in Ohio. As mentioned in the article above, an Ohio judgment is valid for 5 years, and then becomes dormant unless revived by the judgment-creditor. The judgment-creditor has 10 years to revive a dormant judgment. Dig out the paperwork you may have for the lawsuit and judgment, and contact the court clerk's office for the court that heard your case. Ask one of the clerks if the judgment-creditor (the clerk may call it the plaintiff) renewed or revived the judgment. If it did not, then the judgment became dormant subject to revival in September 2013.

The Fair Credit Reporting Act (FCRA) is a federal law that sets the rules consumer credit reporting agencies must follow. The most well-known consumer credit reporting agencies are Equifax, Experian, and TransUnion. Under the FCRA, a judgment can appear on your credit reports for 7 years or your state's statute of limitations for a judgment, whichever is longer. Here, the judgment can appear on your credit reports until September 2015, unless the judgment is revived.

I do not know what the "pending" status for this judgment means. My guess — note that word choice — is the consumer credit reporting agency sent a message to the court clerk's office asking for a status update on the judgment and has not heard if it was renewed.
Cindy M.
Oxford, OH  |  June 28, 2013
Back in 2008, I was served papers to go to court for a debt in Kentucky. I moved out of state before the court date. Apparently, there was a judgement against me. Now, I live in Ohio and the company is trying to garnish my bank account. Luckily, it was an old account so they did not get anything. After seeing that, I took most of my money out of my existing account. I have a couple of questions:
  1. Can they take my money from a bank account that is in another state than where the judgement came from?
  2. Can they put a lien on my car that is in another state than where the judgment came from?
  3. Is there a statue of limitations on court ordered judgements?
  4. Someone said that, in Ohio, they are not allowed to take the last $400 in your account. Anything over that is up for grabs. Is this true? I never have more than that much anyways so am I safe?

Any help you can give me would greatly be appreciated. I have very little money and I cannot afford to live without it.

Bills.com
July 02, 2013
The answers to most of your questions can be found in Ohio Revised Code Chapter 2329. Under Ohio law, a judgment-creditor in another state can domesticate their judgment in Ohio. An Ohio court will then allow the creditor to garnish the Ohio resident's wages (unless they are exempt), levy their bank/credit union accounts, place a lien on the Ohio resident's real property, and in some cases ask the sheriff to seize the resident's non-exempt personal property. On to your questions:
  1. Account garnishment is allowed to judgment-creditors who domesticate their non-Ohio judgment in an Ohio court. In other words, the answer to your first question is yes.
  2. Under Ohio 2329.66, the first $3,450 of a motor vehicle is exempt. If the market value of your vehicle is that value or less, the judgment-creditor cannot touch the vehicle. If the vehicle is worth more than $3,450, the judgment-creditor may ask the sheriff to seize the vehicle and sell it at an auction. The sheriff would then give you a check for $3,450 and the rest to the judgment-creditor.
  3. The lifetime of judgment in Ohio is 5 years, but this can be renewed.
  4. The exempt amount for bank/credit union accounts in Ohio is currently $425, but this is revised periodically. As you suggested, anything above $425 is ripe for levy.

Reread the article above to learn more about Ohio's laws. Consult with an Ohio lawyer who has consumer law experience to learn more about your rights and liabilities. Call your county bar association and ask for the names of the organizations that provide no-cost legal services to people with low or no income in your area. Make an appointment with one of the organizations, and bring all of the documents and letters you have regarding the debt to your meeting. The lawyer you meet will advise you accordingly.

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Fran T.
Austintown, OH  |  November 14, 2013
In your section about SOL involving credit card debt, you state that are decisions from Ohio courts ruling there are either 4, 6 or 15 years SOL in Ohio for CC debt. Unfortunately, I did not see any cites to any of the Ohio cases your referenced such as the cite you made for the Michigan court that ruled a 4 year SOL. Could you please list those cites? Thanks much.
Bills.com
November 14, 2013
The law is messy sometimes. This is one of those times. We find no authoritative appellate or Ohio supreme court cases that clarify which statute of limitations applies in credit card cases. As we mention above, local courts either follow their own precedents, or follow the law argued most persuasively by one of the parties.

Readers, please share any citations of appellate or higher court cases settling the statute of limitations on Ohio credit card cases.
Tariq H.
Swansea, IL  |  May 24, 2013
I am trying to fix my credit. I paid off all of my delinquencies and they have been on my credit since 2007. I am a resident of Ohio. Is there any way that i can get these off my credit sooner? Hunter
Bills.com
May 28, 2013
The federal rule that controls the behavior of the consumer credit reporting agencies — Equifax, Experian, and TransUnion are the biggest and most well-known — is found in the Fair Credit Reporting Act. Accurate derogatory information like what you described can appear for 7 years. If the derogatory information is not accurate, such as the dates or amounts are wrong, then you have a right to dispute the information.
Matthew M.
Westchester, OH  |  March 16, 2013
I received notification from an area court that a collection agency is attempting to collect an alleged debt from a state university from 1999 and 2002. In the documents the attorney filed with the court, all they provided as validity of debt were account print outs from the university. They haven't provided any written contract bearing my signature. My question is this: doesn't the plaintiff have to prove that I signed a contract agreeing to pay? Also, wouldn't alleged debts from 1999 and 2002 fall outside of the SOL in Ohio? I sent an answer both to the court and the attorney alleging that they cannot prove validity of the debt because they have no written contract with my signature. And since they cannot provide this, do they have any case at all?
Bills.com
March 18, 2013
In general, you are correct — the defendant can challenge the existence of a contract between the parties. If the court determines there was no contract, the plaintiff has no case and the court will dismiss the case. How a defendant accomplishes this defense is the key.

Consult with a lawyer in your state of residence who has civil litigation experience before you file any other answers with the court or communicate to the plaintiff.

Regarding Ohio's statute of limitations, this changed recently. The new rule is the statute of limitations for Ohio contracts is 15 years for actions accrued before Sept. 28, 2012, and 8 years for actions accruing after that date (see Ohio Revised Code 2305.06 for details). Consult with a lawyer in your state to learn which Ohio statute of limitations applies to you. I believe it is the 15-year rule, but a lawyer can analyze your situation in person and in greater depth.
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