Statute of Limitations for Debt Collecting by State

According to U.S. law, most private debts can only be collected for a limited period of time after the debt has become delinquent. Just as many crimes can only be prosecuted for a set amount of years after they have been committed, a creditor can only seek payment of a debt within the time set by the state. This period of time is known as the statute of limitations on the collection of debt.

Statute of Limitations

The statute of limitations on debt is set at the state level. Each state sets a separate statute of limitations for different types of debt. A state will typically set a different statute for debts derived from open accounts, written contracts, oral agreements, promissory notes and those regulated by the Uniform Commercial Code. For example, in Kentucky, an open account debt has a statute of limitations of five years, while a debt from a written contract has one of 15 years.

Civil Judgments

Generally, exceptions to these statutes of limitations are made from debts derived from civil judgments. Civil judgments can be issued in cases for breach of contract, such as when a borrower fails to fulfill the terms of a loan, and for other kinds of compensation for damage awarded by a judge or jury, such as suffering caused by employer negligence. Judgments may have a statute of limitations, but can often be renewed one or more times.

Time Frame

Exactly when the time period for a statute of limitations begins is a subject of confusion. In all cases, the time period begins when the last payment was made on the debt or after the debt was first issued, whichever is later. So, if a borrower made his last payment on a debt in 2005 in a state in which the statute of limitations for that kind of debt was 5 years, the statute of limitations would have expired in 2010.

Government Debts

A statute of limitations does not apply to most debts incurred against government agencies, such as tax collecting departments. These debts, unlike debts owed to private creditors, often do not expire -- in some cases, even after the debtor has. For example, if a person owes back taxes to the federal government, the Internal Revenue Service may be allowed to collect even after the person's death.