Statute of Limitations Laws for Debt Collection Agencies

Many consumers believe that there is a statute of limitations on the debt they owe to banks & other creditors. The fact is that there is absolutely NO statute of limitations on unsecured debt owed. There is however, a limitation on the time creditors have to sue you and recover their losses for monies owed.

You are obligated to pay any of the following types of debts if you owe them:

  • Personal consumer loans
  • Unpaid tax liabilities
  • Underpayment of salaries, wages & royalties
  • Money owed to insurance companies
  • Credit card debt

Video: Statute of Limitations on Credit Card Debt

Attention: There is an alternative to paying the payments that you are currently paying and we can help reduce your payments for free. We are a non-profit debt consolidation company. We can also answer any questions about the Statute of Limitations for your individual state. Call us today at 1-877-329-5564.

The number of years that debtors have to sue you and recover their losses varies from state to state. Furthermore, the rules & means of recovering these losses are different dependant on state. For example, some states allow debtors to recover property & other assets in return for debt owed while others do not. We have listed the Statute of Limitations Laws for Debt Collection Agencies. We will include Statutes, Judgments, Garnishments, Interest Rates, and Bad Check Laws.  Select your state for more state specific information.

1) Open Account: An open account is a revolving line of credit that has varying balances over the course of its life. Example of an open-ended account is a credit card. For example, the statute of limitations period that debt collectors have to collect credit card debts owed in the state of Alabama is 3 years.

2) Written Contract: A written contract, as the name states, is a loan agreement that is signed by both you and your lender, stating the terms of the loan e.g. repayment date, applicable interest rate, any late payment penalties, etc.

statutes of limitations

3) Promissory Note: A promissory note is very similar to a written contract, the only big difference is that the scheduled amortization of payments and applicable interest rates is all defined within the promissory note. A mortgage agreement is an example of a promissory note. See this government example promissory note.

4) Domestic Judgment: A domestic judgment allows the creditor to collect debts owed in the State where the loan agreement (written contract) was signed. Once a debt collection judgment is received from the court, collectors can recover their debts from the state where the judgment was issued or the state where you (the person owing the debt) reside.

Example:
You live in California where the statute of limitations for Open-Ended accounts is 2 years. You have a debt collector trying to collect his debts owed from you in the State of California by following the statute of limitations law. If the statute of limitations period is over, the creditor can sue you in another related state where the actual transaction occurred. For example, if you repaired your car in the State of Alabama, the creditor can be granted a "Domestic Judgment" clause in the state of Alabama allowing him to collect debts owed by you in the State of Alabama, where the car was actually repaired.

Video: Debt Collections Exposed

5) Foreign Judgment: A foreign judgment is a court issued judgment from any state, OTHER than the state where the debtor currently resides in. For example, if Peter who owes $5000 debt resides in Arizona, a debt collector can ask for a Foreign Judgment from any state OTHER than Arizona to pursue his/her debt collection efforts.

6) Civil Penalty: A civil penalty is a type of fine levied against a wrongdoer who has committed a civil crime and must pay the state a penalty. This penalty is in the form of monetary value ($$$). A civil penalty is NOT a criminal punishment. It is merely a form of compensation to the state for wrongdoing carried out by a person. 



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