The Statute of Limitations on Debt Has Passed. Now What?

If you don’t make debt payments, you usually get charged late fees, and your creditor may send your account to collections. Eventually, the creditor or collection agency might sue you to collect the debt. 

But once the statute of limitations on debt expires, it becomes more difficult for creditors to force you to pay back what you owe. Here's what to know about the statute of limitations—and how you can inadvertently restart it.

What Is the Statute of Limitations on Debt?

The statute of limitations on debt is the period of time in which a creditor might successfully sue you for unpaid debts. This varies by state, and sometimes by the type of debt. In many states, the statute of limitations is between three and six years, though a few states have statutes of limitation of 10 years or more.

The clock may begin on the date you made your last payment or on the date of your first missed payment (it varies by state). Look up the laws in your state or consult with a lawyer if you need guidance on when the statute of limitations expires.

What Happens After the Statute of Limitations on Debt Passes?

When the statute of limitations on debt passes, the debt is considered “time-barred,” or uncollectible. All a creditor or collections agency can do is ask you to pay—they cannot compel you to via a lawsuit. 

If a creditor or debt collection agency sues you after the statute of limitations is up, you can let the court know that the statute of limitations has expired. If you're correct, the court should dismiss the case.

This doesn't mean you're necessarily off the hook for the debt, though. Creditors are still within their rights to contact you about the debt to get payment. They may send you letters, call, or contact you via social media.

It's worth noting that delinquent debt can remain on your credit report for up to seven years after the date of delinquency, even if the statute of limitations has ended. This could reduce your credit score and make it more difficult to borrow money. 

Can You Restart the Statute of Limitations on Debt?

If you're contacted about an old debt, be careful. There are a few ways you may inadvertently restart the statute of limitations. This could open you up to a lawsuit over the unpaid debt. 

Here are some actions that could reset the statute of limitations for a debt.

Acknowledging that you owe a debt

Even simply admitting that a debt is yours and that you owe it could restart the statute of limitations. Be careful what you say to debt collectors, and avoid directly confirming that the debt is yours—especially in writing.

Making a payment

Creditors might try to coax you into paying just a little bit of your debt. It might seem harmless enough, but this could restart the clock on the statute of limitations. Even so much as a token payment to get a debt collector off your back for a few weeks could reset the clock.

Agreeing to a payment plan or settlement offer

Though laws may vary by state, in some cases, even agreeing to pay via a plan or settlement is sufficient to restart the clock.

Moving to a state with a longer statute of limitations

A creditor may be within its rights to sue you for an unpaid debt if you move to a state with a longer statute of limitations. For example, if your current state has a three-year statute of limitations that has just expired but you move to a state with a six-year statute of limitations, the creditor could still legally come after you for the debt.

If you have questions about what could restart the statute of limitations on your debt, it's worth speaking to a lawyer familiar with the rules in your state. They can offer personalized advice for your situation.

Just Because You Can Get Sued Doesn't Mean You Will

Even if the statute of limitations on your debt hasn't expired or has restarted, your creditor may not sue you. It's a big financial and logistical headache for creditors, and they often prefer to work out a private agreement with you if they can. 

It can help to communicate with your creditor about your financial situation and explain when you think you can pay. If they can’t get in touch with you, they might decide they have no choice but to sue you. 

Ultimately, though, to be free of the debt and the collection calls, it’s necessary to find a way to pay it off. You could save up and make payments on your own, or work with a professional debt relief company like Freedom Debt Relief. Explore all your options before you decide which is the right move for you.