Did you know that debt has an expiration date? It’s actually subject to a legal statute of limitations, which limits how long debt collector can sue to collect an unpaid balance owed to a creditor. If the debt collector waits too long, and the statute of limitations has expired, they can’t sue to collect the balance. That limit is determined by the statute of limitations (SOL) of the Fair Debt Collection Practices Act (FDCPA). Limitations vary by state and the type of debt.
Limitations are usually between three and six years, but some longer limits do exist. Of course, never depend on using the SOL as a way to solve your money issues.
Why? Because the statute of limitations have nothing to do with how long an unpaid debt stays on your credit report, which is generally 7 years. A court can also award a judgment to a creditor on time-barred debt, which is a debt you didn’t repay and can’t be collected because the SOL has expired, if you don’t show up to fight it. Plus, there are ways to unknowingly restart the SOL clock.
So, if you have unpaid debts, know the statute of limitations that applies to those debts. To check your credit for outstanding accounts, pull your credit reports for free each year at AnnualCreditReport.com and viewing your free Experian credit report summary on credit.com.
About the Fair Debt Collection Practices Act (FDCPA)
The FDCPA is a federal law that limits the actions of third-party debt collectors attempting to collect a debt on behalf of a creditor or lender. In other words, it protects consumers from unfair debt collection practices taken by third-party deb collectors.
The act gives the consumer the right to sue a collector who uses unfair practices in attempting to collect a debt. The FDCPA also outlines a range of potential damages that a consumer can receive, such as monetary damages and attorneys’ fees for the lawsuit.
The FDCPA does not apply to the original creditor or lender. It applies only to a debt collector or collection agency who assumed the collection of the debt. The act prohibits any deceptive practices used to collect payment on a consumer’s debt.
Definition of a Creditor
A creditor is the original entity that extends a line of credit to the consumer; in other words, the original lender on an account. FDCPA statute of limitations don’t apply to debts owed to the original creditor.
Definition of a Debt Collector
A debt collector is a third-party company that attempts to collect on that debt it purchased from a creditor. Third-party collectors include debt collection agencies and collection attorneys. FDCPA protections do apply to a debt collector.
Exceptions to the FDCPA
The FDCPA applies to consumer debt, not business debt. It covers debt that are not in default when purchased by the collector. This means that the original creditor must sell the debt to the third-party collector before the debt goes into default.
Federal and state employees and legal process servers are also exempt from the FDCPA.
Fair Debt Collection Practices Act Statute of Limitations FAQs
Here are the seven most commonly asked questions about the FDCPA statute of limitations.
- How long Is the FDCPA statute of limitations for my debt?
The SOL period starts when you fall behind on a debt or from the date of your last payment. The length of the SOL depends on state law for that type of debt. This map on this page to state statute of limitations, offers some basic guidance. Know though, that SOLs are not clear-cut. So, check with your state attorney general’s office, a consumer law attorney, or legal aid, especially if you’re threatened with legal action.
- Can a debt collector try to collect after the SOL has expired?
In many cases, yes. However, if you tell the debt collector not to contact you again, they are legally mandated to comply. It’s always a good idea to put your request in writing. Once the collector receives your written request, it can only contact you only to confirm that it received your request or notify you of legal action.
In some states, trying to collect a time-barred debt is illegal, and a collector attempting to do so is breaking the law.
- If the SOL has expired, can I still be sued?
It isn’t uncommon for consumers to be sued for time-barred debts. If you’re sued for an old debt, and the statute of limitations has expired, you can use the expired statute of limitations as a defense against the lawsuit. Find a few of the other debt collection defenses you can use.
However, many consumers don’t show up to court. This opens the door for the creditor or collector to get a judgment against them. So, don’t ignore a legal notice about a debt, even if you think the statute of limitations has expired. Find a consumer law attorney or bankruptcy attorney for help if a third-party collector tries to collect the debt.
- Should I pay an old debt?
That’s something only you can decide. However, paying anything — even a small amount — on an old debt, can restart the statute of limitations. That’s why it can be risky to pay an old debt if you aren’t able to pay it in full. If you do, you can open yourself up to collection efforts, or even a lawsuit, for the entire amount the collector says you owe.
- Can a debt still appear on my credit reports after the SOL has expired?
In many cases, yes. The length of time that negative information can be reports on your credit is governed by the Fair Credit Reporting Act. Most negative information can be reported for seven years.
The statute of limitations for most consumer debts, on the other hand, is four to six years. If the statute of limitations expires on a debt in four years, the related collection account can still appear on your credit reports for another three years after that. And, yes, collection accounts can do significant damage to your credit scores.
- I took out a deb in one state, and later moved to another. Which state’s SOL applies?
That’s a difficult question to answer. Consumers can be sued in the state where they took out the loan or the state where they currently live. Sometimes the statute of limitations is based on the laws of the state noted in the contract. For credit cards, the state is noted in the credit card agreement.
When it isn’t clear which state’s SOL applies, it’s often up to the court to decide. In many court cases, the shortest statute of limitations is applied. But that’s not true in all cases. That’s why it is helpful, if you’re sued for a debt, to consult with a consumer law attorney who can help you understand if the statute of limitation has expired.
- What is the SOL for court judgements?
If creditors or collectors have a court judgment, there’s often a separate statute of limitations that applies. If you have unresolved debts, be sure to get your free annual credit reports to see if they include any judgments. In many states, debts remain on your reports for 10 years or more, and judgments can be renewed. Learn more about how about judgments work.
This article was originally published April 20, 2017, and has been updated by another author.