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Your Rights Under State Law

Statute of Limitations on Debt Collection

Each state limits how long a debt can be collected. After a set period of time has passed, an unpaid debt is considered by law to be a "time-barred debt" and is uncollectable. More precisely, the debt collector can still try to collect the debt, but they cannot sue you for it. Without the ability to sue, the most a creditor can do is report the delinquent account on your credit report for up to seven years. The clock starts ticking from the day you last made a payment on that account and the clock gets reset if you make a payment, even a partial payment! This is why I do not recommend making any payments on delinquent accounts unless you are prepared to settle the account.

To determine what the statute of limitation is in your state, consult the chart below and confirm with your state's Attorney General's office.

Alabama3 years
Alaska3 years
Arizona3 years
Arkansas5 years (2 years for medical debt)
California4 years
Colorado6 years
Connecticut6 years
Delaware3 years
District of Columbia3 years
Florida5 years
Georgia4 years
Hawaii6 years
Idaho 5 years
Illinois10 years
Indiana6 years
Iowa5 years
Kansas5 years
Kentucky5 years
Louisiana 3 years
Maine 6 years
Maryland3 years
Massachusetts 6 years
Michigan6 years
Minnesota 6 years
Mississippi3 years
Missouri5 years
Montana8 years
Nebraska4 years
Nevada4 years
New Hampshire 3 years
New Jersey6 years
New Mexico4 years
New York6 years
North Carolina3 years
North Dakota6 years
Ohio6 years
Oklahoma3 years
Oregon6 years
Pennsylvania4 years
Rhode Island10 years
South Carolina3 years
South Dakota6 years
Tennessee 6 years
Texas 4 years
Utah4 years
Virginia3 years
Vermont3 years
Washington6 years
West Virginia 5 years
Wisconsin6 years
Wyoming8 years

Make sure you consult your actual state statute and verify the times listed above (search the internet for "unsecured debt statute of limitations yourstate"). Some states start the clock from the date of your first missed payment, while others start the clock from the date the original creditor charges-off your account (usually six months after the date of your first missed payment).

If a debt collector contacts you after your state's statute of limitations has expired, write a letter (certified mail with return receipt) to the debt collector stating that the account is no longer collectible and instruct them to cease all communication and collection efforts (a notification of time-barred debt sample letter can be found in the Resource Library). If you are sued by a creditor after your state's statute of limitations has expired, simply provide the court a copy of your state's statute and a copy of your credit report showing the date of your first missed payment and/or the date of charge-off by the original creditor.

Keep in mind that after the statute of limitations has expired on your debt, it can still be legally reported on your credit report for up to seven years. However, a time-barred debt is less likely to be verified by the creditor and is therefore easier to remove through a formal dispute with the credit bureaus.

If you live in a state with a long statute of limitations period, don't despair. In my experience if you are going to be sued, it will most likely happen in the first couple of years. The reason is because your collection account diminishes in value to a debt collector over time. Since the most expensive collection activity is to sue, chances are a debt collector will sue—if they are going to—while the account is still fresh. That is not to say that you won't be sued after a couple of years, but the odds drop off dramatically over time.

Now that you know the major players, how debt collection works, and more importantly your state and federal rights, it's time to put it all together.

> Putting It All Together
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