What is the statute of limitations in regards to debt collection?


Quick Answer

Debt collection statutes of limitations vary by state, the Consumer Financial Protection Bureau notes. Companies can attempt to collect a debt indefinitely, but they cannot sue debtors to collect debts for which the statute of limitations has expired, the Federal Trade Commission notes.

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Full Answer

The statute of limitations can vary within a state for different types of debt, such as debt from credit cards, promissory notes, oral contracts and written contract, reports Bankrate.

The debt becomes time-barred once the statute of limitations that governs the collection of debt expires. The debt collector can still contact the debtor advising him of the debt, but if the debtor ignores or refuses to pay the debt, the debt collector can't initiate court action to collect it, the Federal Trade Commission notes. If the debt collector does initiate court action after the expiration of the statute of limitations, the debtor can challenge the lawsuit.

Debtors can ask the debt collector if the debt owed is time-barred. If the debt collector answers the debtor, the law mandates his answer must be truthful. In some states, if the debtor makes a partial payment on a debt for which the collection statute of limitations has expired, this could restart the statute of limitations, explains the Federal Trade Commission.

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