Statute of Limitations

Statute of Limitations
Daniel Cohen
Apr 27, 2015
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    8 min read
Key Takeaways:
  • Analyzing which statute of limitations applies is more difficult than it first appears.
  • Look to the contract you signed to see if it has a choice of laws clause.
  • Understand what actions you take can extend the SOL beyond the standard time.

How to Tell Which Statute of Limitations Applies to Your Situation

This article helps readers analyze their statute of limitations questions. Statutes of limitations seem straight forward at first glance, but can become tricky because each state legislature created their own rules for handling time limits on actions.

What Is a Statute of Limitation?

All jurisdictions have a body of statutes in their codes of law called limitations of actions, periods of prescription, and prescriptive periods, commonly referred to as the statutes of limitations. The idea behind these laws is we as a society decided we do not want old debts hanging around forever — we want people and businesses to move on with their lives without worrying about being sued. States and the federal government set statutes of limitations for civil and criminal actions. Each state legislature wrote dozens of statutes of limitation.

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The length of time an original creditor or collection agent have to file a lawsuit depends on the:

  • Consumer’s state of residence
  • Type of debt
  • Contract with the lender (more about contracts below)

For example, many states allow more time for original creditors and collection agents to file suit to collect on closed-ended consumer loans, such as vehicle loans, than on credit card debts or spoken contracts. Most states give credit card issuers 3 to 4 years to file suit after default, but some states allow as many as 10 years. See the page collection laws for every state in the US.

Here’s a page containing a list of statute of limitations by state. If an original creditor or collection agent files a lawsuit after the allowed time, the court will usually throw the case out and not allow the creditor to file suit again (called dismissed with prejudice) if the consumer/defendant raises the statute of limitations defense.

The defendant must raise the issue of expired statute of limitations in a written response to the lawsuit, or else the court will not know that the statute of limitations has expired. Courts will not raise the statute of limitations defense on behalf of the consumer. Therefore, you must raise the statute of defense if it is available to you. Although the periods vary from state to state, there is only one (Ohio) that is longer than 10 years.

Two States with Separate Rules

Wisconsin and Mississippi outlaw lawsuits against consumers in cases where those state statutes of limitation have passed. Wisconsin and Mississippi are the only exceptions to the “lawsuits are allowed for original creditors even if the statute of limitations expired” rule.

What a Statute of Limitation is Not

The passing of the statute of limitation does not mean an original creditor cannot file a lawsuit against a consumer in most states. The passing does not mean the debt is canceled or extinguished, or must be removed from a consumer’s credit report. It does not prevent an original creditor or collection agent from contacting the consumer to collect the debt.

A statute of limitations, in most states, is just a tool for lawyers to use as a defense in a lawsuit. It is an affirmative defense the defendant must raise in a timely manner before the conclusion of the trial.

FDCPA Violations

Most courts find it is a violation of the FDCPA for a collection agent to pursue a debt collection lawsuit against a consumer after the statute of limitation expired (Kimber v. Federal Financial Corp. 668 F.Supp. 1480 (1987)). Some collection agents still sue in hopes the consumer will not know this rule.

Choice of Laws and Tolling

The statute of limitations for a debt can be set in a contract with a choice of laws clause. A credit card issuer can write a clause that says something to the effect of, “Our headquarters may be in New York, and you may reside in Ohio, but if a dispute arises from this contract, we agree to use the laws of Delaware.” Most judges despise choice of laws clauses, and will make efforts to find reasons to ignore them in favor of their own state laws. However, the US Supreme Court ruled that choice of laws clauses in consumer contracts conform to the Constitution. Therefore, any statute of limitations analysis should include a review of the contract the consumer signed.

Tolling can also affect a debt’s statute of limitations. Tolling refers to a time-out on the running clock of the statute of limitations. In some jurisdictions, a debtor can take an action that is viewed as preventing reasonable efforts by the creditor to collect on the debt. For example, if a debtor leaves the country for a few years, the court may decide that because the creditor did not have a fair chance to collect, the statute of limitations was not running during the time the debtor was abroad. Tolling rules vary from state to state.

Resetting a Statute of Limitations

For debt, the statute of limitations starts either when the debtor last made a payment, or when the payment was due. Once the statute of limitations on a debt is reached, the creditor may use the court system to collect the debt. However, if the debtor/defendant raises the affirmative defense of statute of limitations in a timely manner, the court must dismiss the case. A court will not raise the statute of limitations defense on its own — the court is a neutral referee — the defendant must raise this defense.

A defendant can reset a statute of limitations clock back to zero two ways:

  1. Make a voluntary payment
  2. Acknowledge the debt

Under common law, the acknowledgment must be in writing and convey the idea the consumer promises to pay the debt. Not surprisingly, many state legislatures wrote their own version of this rule. Arizona, Florida, New York, and Oregon are four such states one can find with acknowledgment of barred action rules.

Statute of Limitations on Credit Card Debt

States wrote statutes of limitations laws before the invention of credit cards. Some state courts throw credit card debt in the written contracts bin. Others consider credit cards open accounts, which were written with bar tabs and feed store accounts in mind that are customarily settled at the end of the month. Other state courts lump credit cards with spoken/verbal contracts. Each of these often have different statutes of limitation.

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Charge Off and Statute of Limitations

Some consumers confuse charge-off and statutes of limitations. The two concepts have no relationship to each other. Charge off is an accounting term used by creditors when they move a delinquent account from its accounts receivable ledger to the bad-debt line on the general ledger. This usually occurs between 180 and 240 days from the date of the last payment. The fact an account is charged-off does not mean the debt may not be collected later. The charge-off date does not correspond to the statute of limitations on collecting a debt.

Analyzing a Statute of Limitations Issue

There are at least five key issues to a statute of limitations question:

  1. Did the parties agree to a choice of laws in their contract? Review the contract, and look for a “choice of laws” clause in the contract. If the contract states which state laws the parties agree to use if a dispute arises from the contract, then there is the answer to your question. However, although choice of laws clauses are well litigated, some judges take pains to find reasons to ignore a choice of laws clause.
  2. What are the statutes of limitations for the plaintiff’s state? The defendant’s? Assuming the litigants reside in different states, the statutes of limitations for each state may be different.
  3. How does each state’s supreme court look at statutes of limitations conflicts with sister states? Consult with a lawyer in your state who has consumer law experience to learn how your state resolves conflicts-of-laws issues.
  4. Is the plaintiff filing the case in its home state, or in the defendant’s state of residence? And if it is filing the case in the defendant’s state, is it asking the court to use a different state’s statute of limitations?
  5. Who is the plaintiff? If the party filing the lawsuit is the original creditor, then the court will give a great deal of weight to the choice-of-laws clause in the contract. If the plaintiff is a collection agent, under the FDCPA, collection agents for a credit card or similar debt must file a lawsuit either in a court where the consumer lives, or the judicial district where the consumer signed the contract (15 USC § 1692i). Judges like to use familiar laws and will bend over backwards to use their state’s statute of limitations. However, if the plaintiff’s lawyer creates a convincing argument that another state’s statute of limitations is more appropriate, the judge may agree.

Statute of limitations questions seem straight forward: “Which statute of limitations applies to me?” However, answering this question is tricky because a small change in facts can have a huge impact on finding the correct answer. If the facts are simple — for example, both parties reside in the same state and agree to use that state’s rules — the answer is simple. However, you need a deeper analysis if your facts are complex. Consult with a lawyer in your state who has consumer law or civil litigation experience if your facts are complicated.

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GGail, May, 2021

I was a personal guarantor of a loan for a corporation. I signed it may 2017 and it expired 5-31-17. I signed it in the state of pa where there is a 4 year statue of limitations but the company suing me is in Indiana has a 6 year statue of limitations. Which one would apply to my case. The debt transactions were done by a salesman in the corporation who frauded and returned all the inventory in 2021 without authorization while me the owner was being treated for cancer and is this criminal act even a source of defense with this contract.

JJoshua Abreu-Rosa, Aug, 2021

Hello Gail.

Thank you for reaching out. According to the article in your conflict regarding statutes of limitations conflicts with sister states. This would be best advised by an attorney.

Regards, Josh

AApril, Mar, 2021

I just received a summons on a credit card debt that was 2 months away from reaching statute of limitations. It was sold from my original creditor to a recovery firm. That firm's headquarters is in Virginia where the SOL is shorter than NY and time would have passed. They issued the summons in NY. I thought I read somewhere that NY law can follow the rule of the creditor's location. I'm wondering if that's true and in this case if it would be the current creditor which would place it after the SOL expiration.

JJoshua Abreu-Rosa, Aug, 2021

Hello April,

Please, do not take my answer to be legal advice as I am not an attorney. Only attorneys can offer legal advice. 

I am assuming you are asking a hypothetical question? I was under the impression that They (Recovery Firm from Virginia) issued the summons in NY two months prior to the statute of limitations. The question depends on you receiving the Summons and complaints after 6 years when you broke contact. Who would the summons come from? Likely, this would come from the original creditor. Because an expired statute of limitations clock does not mean the original creditor is stopped from filing a lawsuit against a delinquent debtor. If it comes from a third party you must file an answer to the complaint or you will lose by default. 

I am assuming the confusion comes from the recovery firm is located in Virginia. According to the FDCPA, the plaintiff must file proper jurisdiction and venue, or county and state court. This helps ensure that Defendants are physically and financially able to attend court hearings and that Plaintiffs cannot choose the state where the law most favors them.  Regardless of their headquarters if they are going to sue they need to process in the proper jurisdiction. This could explain why the Recovery Firm filed in NY. 

If you are still seeking more accurate answers I suggest speaking with an attorney. 

Regards, Josh 

MMichelle, Feb, 2021

I just received a call stating I have a court date on Monday. However, I have not received any summons or documentation. When I called the # they gave me they said they were Civil Dispute Resolution & the debt was from a Cash Line loan. They provided me my last 4 of my social & an address I lived at around 2008. The claims are for breach of contract & attempt to defraud. I do not remember taking out a loan from this establishment. Should I call them back & attempt to retrieve the summons or ignore this?

JJoshua Abreu-Rosa, Aug, 2021

Hello Michelle.

Thank you for reaching out.  Please do not take my answer to be legal advice, as I am not an attorney and only attorneys can offer legal advice. 

Because they are pursuing you treat very serious determine if it's past the statute of limitation. If it is put up defence response bring it to the court's attention so they can close on it immediately.

Regards, Josh

EEdith Pitt Taylor, Oct, 2020

I have several charge of debts from 2015-2016. Can I get those removed from my credit report? They are credit cards, they are 3-5 years old. I also have 2 collections that are 3 years old.

DDaniel Cohen, Oct, 2020

Edith, you are confusing the statute of limitations on debt with how long a derogatory account can appear on your credit report. They are separate issues. The SOL is the period of time a creditor or debt collector has to file suit against you to collect. After the SOL is reached, if you are sued you can avoid paying the debt if you assert the SOL as an affirmative defense. 

Derogatory accounts will appear on your credit report for 7 to 7.5 years. Even if you pay the account down to $0, the negative information remains on the credit report, unless the creditor decides to inform the credit bureau to delete it. 

In your examples, once it is 7 years from the date you defaulted on your account, if the account still is reported to a credit bureau, you can file a dispute and have it removed.

DD Babcook, Feb, 2018

I live in Nebraska & am being harrassed by a collection firm in MN. They're claiming they're trying to collect a debt I have no recollection of. They're claiming a judgement was granted against me in December of 2009. Is any of this even possible due to NE statute of limitations being 5 years and MAN is 10 years I believe. Is there anything I can do to stop all of this. I have just recently started working after not being in the workforce for almost 10 years while being a stay at home parent. I don't want to risk my new job but as I mentioned I have no knowledge of this debt as I haven't had any credit cards or anything for over 10 years. Any help or suggestions are greatly appreciated.

DDaniel Cohen, Feb, 2018

The first thing you should do is to determine if a judgment in Minnesota was entered against you. Get a copy of your credit report and look in the public records are. You can get one free report every 12 months from each of the three bureaus by going to Start with one bureau. Check the "Public Records" area of the report. If that bureau doesn't show it, check the next. Unlikely that only one will show it, but checking all three, if need be, seems prudent, given how devastating a garnishment can be.

If there is a judgment in MN, then it would need to be domesticated in Nebraska, before collections could proceed. In most states, judgments can be renewed. In MN, a judgement lasts 10 years and can be renewed. 

I suggest you consult with an attorney if a judgment does exist. If there is no judgment, this collector may be trying to get you to panic and pay them when you have no requirement to do so.