The Two-Year Statute of Limitations on Debt

Debts are legally enforceable obligations. A person who owes money to another party is not just bound by honor to pay him back, but is compelled by the force of the law. However, the person or entity owed money faces certain restrictions on the collection of this debt. For example, he can only file a lawsuit before the statute of limitations for the debt has expired. Statutes vary by state. and, in some cases, the statute may be two years.

Debt Collection

Technically, a debt is collectible by the creditor for as long as the debtor is alive. However, realistically, a debt cannot often be effectively collected unless the creditor has received a judgment in court against the debtor. To do this, the creditor has to sue the debtor in civil court and have a judge declare the creditor is owed money for the debt. This lawsuit can't be filed once the statute of limitations has expired.

Statute of Limitations

Statutes of limitations on debt place limits on the length of time a creditor can wait before filing a lawsuit against the debtor. Each state has a number of statutes of limitations based on the type of debt. After the statute of limitations has expired, the debtor still owes the creditor money, but the creditor can't sue to get it, so he can't take aggressive action to collect it, such as through wage garnishment.

Two Years

A statute of limitations of two years would mean the creditor has two years from the date the debt became delinquent to sue the debtor for its recovery. After these two years have passed, the creditor can technically file suit against the debtor, but a judge will toss out the case. The case does not, however, have to be won within this two-year period, only filed.

Considerations

The date of the statute of limitations -- the day on which the two-year period begins -- is the day on which the debt became delinquent, after which it was never brought up to date again. However, if a debtor makes partial payment on this debt, the statute of limitations may reset. In addition, in some cases, a judge may be allowed to extend or restart the statute of limitations for a debt.