Indiana law sets a deadline to collect debt called the statute of limitations. A creditor who does not file a collection lawsuit before expiration of the statute of limitations can be barred from using the court to collect the debt. Although Indiana law specifies different limitation periods depending on the basis of the debt, in most situations involving debt based on the extension of credit, the limitation period is six years.
Six-Year Statute of Limitations
Indiana Code 34-11-2 sets forth the specific statute of limitations for all types of lawsuits. For lawsuits to collect on accounts and contracts not in writing, such as debts incurred on credit card accounts, the limitation period is six years. In general a 10-year limitation period applies to written contracts; however, if the contract only involves the payment of money, such as a promissory note or installment agreement, the limitation period is only six years.
Asserting the Statute
The expiration of the statute of limitations on a debt is a good defense to a collection lawsuit, but the court will not be aware of the defense without the debtor responding to the lawsuit. After being served with a collection lawsuit, the debtor must file an appropriate response with the court asserting the statute of limitations as a defense. The court will dismiss a collection lawsuit in situations where the debtor properly asserts the defense. If the debtor ignores the lawsuit, the creditor can apply to the court for a judgment on the debt. After entering the judgment, the debtor can no longer use the statute of limitations as a defense to paying the debt.
Judgments
Indiana law also specifies a statute of limitations on judgments, which is 20 years. After that time, the judgment is considered satisfied. This means that the judgment creditor can no longer use the court process, such as levying on a bank account or garnishing wages, to enforce the judgment or otherwise collect the debt.
Fair Debt Collection
A debt that is expired under the statute of limitations does not automatically become void. The debt collector can still contact the debtor regarding payment of the debt, even though a lawsuit to enforce the debt is no longer viable. Federal and state law prohibit debt collectors from harassing debtors or engaging in any unfair conduct, but simply requesting payment on an expired debt is not harassment. To stop collection calls on an expired debt, the debtor will most likely need to set forth in writing that he refuses to pay the debt because it is expired and to request no further contact. If the debt collector persists, the debtor should consider seeking the advice of an attorney knowledgeable in the law about debt collection practices.
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