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Your State’s Statute of Limitations governs the amount of time a creditor or
collection agency can sue you for a debt. After the statute of limitations has
run, the original creditor and the collection agency cannot bring a lawsuit
against you for the debt.
Review Your State’s Statute of Limitations:
Debt Settlement may be Unnecessary
by rebuildcreditscores.com
Oral Contract:  An oral agreement or “handshake agreement” to pay money
loaned to you.

Written Contract:  Written agreement to pay a loan according to the terms
written in the contract such as an auto loan.

Promissory Note: A written contract that explicitly states scheduled
payments and interest on a loan much like a mortgage loan.

Open-ended Accounts: Revolving lines of credit with varying balances such
as credit cards.
How to Calculate the Statute of Limitations

To calculate the statute of limitations start with the date you made your last
payment (no other payments have been made on that account since then)
and add six (6) months to that date. For example:

  • You made a payment on an account on June 10, 2004 and have made
    no other subsequent payments.

  • Add six (6) months to that date and now you have a date of December
    10,  2004.

  • Let's say you live in California where the statute of limitations is 4 years
    on "open-ended accounts."

  • Now add 4 years to the December 10, 2004.

  • The statute of limitations runs December 10, 2008.

  • The creditor nor the collection agency can sue you for this debt.

What if you have moved to another State

If you incurred a debt in one state but moved to another state, the statute of
limitations may not be the same for each state. In this case, the creditor or
collection agency can choose to use the state with the longer statute.

Re-Starting the Statute of Limitations Date

The statute of limitations can be restarted, even if has expired, in some states
simply by making a payment on the old debt or just by acknowledging that you
owe the debt. It may be wise to ignore the phone calls and write a letter
demanding the debt collector cease all contact. Always send the letter via
certified mail, return receipt. Be sure to state in the letter that you are not
acknowledging you owe the debt.

Credit Reporting Agencies and Negative Marks

According to the FCRA negative marks can remain in your credit files for 7
years, after which time the negative mark and the related collection must be
deleted. The length of time starts from the time you were late or the late
payment went into collection. It does not start from the last time you made a
payment on the account. Some collection agencies will fraudulently update
their reporting status in order to keep the account active thereby extending
the time the account appears on your report. If this occurs dispute it with the
credit reporting agencies and they have to honor the original 7 year reporting
date.

State Statutes vs. Credit Reporting Agencies

Once the 7-year mark has been reached negative entries will drop off your
credit report. This is not the same thing as statute of limitations. Even though
a debt may no longer legally appear on your credit reports after 7 years, you
could still be sued for the debt if the statute of limitations for your debt in your
state is has not run.

Let Sleeping Dogs Lie

Be careful about disputing old debts with the credit reporting agencies. You
could bring the debt back to life by disputing it and awaken the creditors’
interest in collecting the debt. You could get sued and be required to pay the
debt which would be even worse for your credit score. The debt would appear
recent and a recent negative is far more detrimental than an older negative.
You can leave the debt alone and it may drop off in a few years. If the statute
of limitations is well past, you can attempt to get it deleted from your credit
reports but be careful not to do anything that may re-start the statute.

Be careful when Contacting Old Creditors

Some states have a provision that extends the statute of limitations if you
make a payment on an old debt or acknowledge that you owe the debt. A
good faith effort to pay or settle an old debt may turn into a huge negative
mark on your credit report which could potentially be reported for another
seven years. Always negotiate deletions when paying old debts.

Know who you are Dealing With

The original creditor may have written off as a loss or even sold the debt for
pennies on the dollar to a collection agency. Collection agencies can be
unscrupulous in collecting a debt. If you decide to pay a collection agency,
always negotiate a deletion and never pay what they are asking for. Negotiate
a reasonable settlement without ever acknowledging you owe the debt. See
Debt Settlement for more information. If you are dealing with the original
creditor you can still negotiate a favorable settlement but you may not be able
to negotiate a full deletion. Request the original creditor report the debt as
“paid as agreed”. If the report “settled” it’s often worse than the original
negative mark and will not improve your credit scores.
Statute of Limitations
State
 Oral
Agreement
 Written
Contracts
 Promissory
Notes
 Open
Accounts
Alabama
 6
 6
 6
 3
Alaska
 6
 6
 6
 6
Arizona
 3
 6
 5
 3
Arkansas
 3
 5
 6
 3
California
 2
 4
 4
 4
Colorado
 6
 6
 6
 6
Connecticut
 3
 6
 6
 6
Delaware
 3
 3
 6
 3
D.C.
 3
 3
 3
 3
Florida
 4
 5
 5
 4
Georgia
 4
 6
 6
 4
Hawaii
 6
 6
 6
 6
Idaho
 4
 5
 10
 4
Illinois
 5
 10
 6
 5
Indiana
 6
 10
 10
 6
Iowa
 5
 10
 5
 5
Kansas
 3
 5
 5
 3
Kentucky
 5
 15
 15
 5
Louisiana
 10
 10
 10
 3
Maine
 6
 6
 6
 6
Maryland
 3
 3
 6
 3
Massachusetts
 6
 6
 6
 6
Michigan
 6
 6
 6
 6
Minnesota
 6
 6
 6
 6
Mississippi
 3
 3
 3
 3
Missouri
 5
 10
 10
 5
Montana
 5
 8
 8
 5
Nebraska
 4
 5
 6
 4
Nevada
 4
 6
 3
 4
New Hampshire
 3
 3
 6
 3
New Jersey
 6
 6
 6
 6
New Mexico
 4
 6
 6
 4
New York
 6
 6
 6
 6
North Carolina
 3
 3
 5
 3
North Dakota
 6
 6
 6
 6
Ohio
 6
 15
 15
 4
Oklahoma
 3
 5
 5
 3
Oregon
 6
 6
 6
 6
Pennsylvania
 4
 6
 4
 6
Rhode Island
 15
 15
 10
 10
South Carolina
 10
 10
 3
 3
South Dakota
 6
 6
 6
 6
Tennessee
 6
 6
 6
 6
Texas
 4
 4
 4
 4
Utah
 4
 6
 6
 4
Vermont
 6
 6
 5
 6
Virginia
 3
 5
 6
 3
Washington
 3
 6
 6
 3
West Virginia
 5
 10
 6
 5
Wisconsin
 6
 6
 10
 6
Wyoming
 8
 10
 10
 8
 
The debt becomes
uncollectible. This does not
mean a creditor or collector is
prohibited from attempting to
collect the debt. It just means
you cannot be taken to court
after the statute of limitations
has run.

Do not get the Statute of
Limitations (SOL) confused
with FRCA reporting rules and
how long negative information
will stay on your credit reports.
Even though you cannot be sued for debt after the SOL has passed, the debt
can still be on your credit report. Under FCRA Rules, credit reporting
agencies may report a negative debt up to seven years and bankruptcies,
judgments and tax liens up to ten years.

Statute of Limitations varies for each State and depends on the type of debt:
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