Debt Statutes Of Limitation

August 11, 2023


Unlike debts, judgments can usually be renewed, and unless a debtor discharges their judgment with a bankruptcy, or successfully satisfies, vacates, or appeals their judgment; nothing else the debtor does can change how long the judgment is valid for.

Debts are different, because how long they last is initially defined by a state’s Statute Of Limitation (SOL). The SOL usually starts when the debtor is 180 days late, or when they get a letter demanding payment in full.

This article is my opinion, and not legal advice. I am a judgment broker, and am not a lawyer. If you ever need any legal advice or a strategy to use, please contact a lawyer.

SOL time limits average about 4-5 years, however they usually vary by state. A web search will show you the SOL for your state. The SOL clock can be reset by certain actions the debtor takes, for example signing a new agreement to pay; and in some states, if they make even one payment. While the SOL on a debt is still active, the creditor can take that debt to court, and get a judgment. Of course, a bankruptcy discharge can wipe out most debts.

Statutes Of Limitation are intended for dormant debts. In certain states, making a payment can make the statute dormant, because it makes the account “active”. In those states, simply making a payment can reset the starting date of the statute of limitation.

The laws of certain states specify that a partial payment does not restart the SOL clock, unless there is a new written promise to pay. In these states, simply sending a payment does not reset the SOL: Arizona, California, Florida, Iowa, Kansas, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nevada, New York, Texas, Virginia, West Virginia, and Wisconsin. In most other states, making a payment on even the last day of the original SOL time period, resets that SOL date.

In some states, merely promising to make a payment, might even renew the SOL date. Even in that situation, the creditor would have to sue you, and show proof of that promise to a court; either providing evidence of a recorded phone conversation or some written document.

Once a debt’s SOL has expired, conversation alone cannot reactivate it. If a debt collector calls you about an old debt which is past the SOL, that alone does not reset the SOL. Neither does telling a collector you know about the old (SOL-expired) debt, or cannot repay the debt.

Note that SOLs have nothing to do with credit reports. On a credit report, the recently reported dates have nothing to do with the state statutes of limitations. If you have any kind of contact with a collection agency or a creditor, that counts as activity on your credit record. This type of account update is normal and is done all the time.

When a collection agency contacts you about a debt that was discharged in bankruptcy, or where the SOL has expired, tell them that; and then mail them a “cease and desist” letter by certified mail, return receipt requested. Every year or so, get one of those free credit reports, to check that there are no SOL-barred debts are listed there.

Debt collectors will often try to get you to pay something, to keep the SOL alive. An example is when a debt collector tells a debtor they can pay just $10 a month. Even if the company will not accept such a small payment, they may make their offer to attempt to restart the SOL, so the debtor can be sued to get a judgment.

Sometimes, if you do not pay a debt collector, they might get a judgment, which lasts a lot longer than a debt. Sometimes collection agencies sell debts they cannot make progress on (or where the SOL has expired), to another collection agency. This is annoying, and means that you might have to send “cease and desist” letters for that same expired debt a few times.

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