Consumer protection laws in each state limit the amount of time creditors have to sue an individual for a debt owed. Creditors and collection agencies may not file a lawsuit against a consumer for unpaid debt after the statute of limitations has expired.
Types
The statute of limitations depends on whether the debt was incurred through a verbal, open or written contract, and varies by type and state. According to MSN Money, most states consider credit card accounts open contracts rather than written.
Time Frame
The statute of limitations for debt recovery is a matter of state, rather than federal, law. Thus, the amount of time that an unpaid creditor has to file a lawsuit varies by state.
Considerations
In some states, making a payment to the creditor at any time can restart the clock on the statute of limitations, even if the time limit for debt recovery has already expired in the individuals state.
Features
The statute of limitations may limit a creditor to the amount of time it can sue, but doesnt limit its other forms of collection activity. Unpaid creditors may continue to contact consumers indefinitely in an effort to collect overdue bills.
Warning
Some creditors and collection agencies violate the law by suing consumers for debts that are time-barred by the statute of limitations. A creditor may win an illegal lawsuit if the debtor does not point out the expired statute of limitations to the court.
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