The Statute of Limitations on Debt Recovery in Missouri

Imagine receiving a notice to appear in court because someone filed a lawsuit against you, only to discover it is for a debt you don't even remember incurring --- not because you don't keep your debts organized, but because it's so old. As you look back through your personal files, you discover the debt occurred over 15 years ago and it seems unfair to have to face lawsuit now. Missouri puts a statute of limitations on debt recovery in place to avoid this exact kind of situation.

Function

The purpose of Missouri's statute of limitations on debt collection is twofold. The first purpose is to prevent clogging of the court system. If every debt imaginable from decades past was admissible for court proceedings, the Missouri courts system could face more than an overcrowding, but such a vast number of lawsuits that there would be no way to process them all. The second purpose is to preserve justice. allowing creditors to sue alleged debtors at any time is unjust by standards set forth by many municipalities.

Types

There are three types of debts, as determined by Missouri Revised Statutes, to which the statutes of limitations apply: open accounts, oral agreements and written agreements. Open accounts cover debts owed to credit card companies, or to companies such as hospitals that produce an invoice for services rendered. Oral agreements, of course, have no documentation, but are an oral arrangement for the exchange of goods or services for money. Written agreements are contracts showing an agreed upon exchange of a product or service for payment.

Time Frame

According to Missouri Revised Statutes Section 516.110, written contracts and agreements have a statute of limitations of 10 years. This period commences as of the date of the agreement or the date of the last payment, as set forth in the agreement. Section 516.120 of the Missouri Revised Statutes states that open accounts and oral agreements have a statute of limitations of 5 years. In the case of open accounts, this time line commences as of the date of the last invoice sent by the creditor or the date of the last payment. For oral agreements, the statute of limitations commences at provision of the product or service.

Judgment

When a creditor files a lawsuit, the creditor is seeking to obtain a judgment against a debtor for the alleged unpaid debt. If the creditor, or its representative, files the lawsuit within the Missouri statute of limitation for debt recovery, and can adequately prove that the payment is still outstanding, then the court will likely rule in favor of the creditor and put a judgment on the debtor. This will not only affect the debtor's credit history, but can result in garnishment of wages or bank accounts if the debtor still fails to pay.