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Collection Agency Lawsuit Statute of Limitations

Updated on August 8, 2010

Numerous individuals across America daily submit payments on debts they cannot afford to pay without ever knowing that – they may not need to pay that old debt at all. The statute of limitations on debt collection differs depending on the state, but protects all consumers from being hounded indefinitely for bad debts. 

Length of the Debt Collection Statute of Limitations

The statute of limitations varies depending on the type of debt you owe and where you live. Depending on your state, a collection agency or other creditor may have only three years to sue you or longer than ten years. Most states statutes of limitations average roughly five years. 

Collection agencies are notorious for filing lawsuits on debts that are “out of statute” or “time-barred.” This means that the statute of limitations on the debt has already expired and, although the collection agency can still collect, it cannot use a lawsuit to force you to pay up. Unfortunately, a judge has no way of finding out this information if you don’t bring the expired statute of limitations to his or her attention in court. Translation: You absolutely must attend the court hearing if a collection agency sues you for a time-barred debt!

Collection agencies sometimes sue for time-barred debts.
Collection agencies sometimes sue for time-barred debts.

If you don’t show up in court and tell the judge that the statute of limitations has expired, the collection agency will be awarded a judgment against you. Once the judgment is issued, the collection agency will go from being a nuisance to being a danger. They then have the legal right (in most states) to garnish your paychecks and your bank accounts. Some will even pursue a lien against personal property such as your home or car. 

Respond to the Court Summons

Luckily, you can respond to the court summons and alert your creditor to the fact that the debt its suing you for is beyond the statute of limitations in your state and no longer legally enforceable. Because the collection agency knows there is a good chance you’ll show up in court to present this evidence to the judge, its no longer in its best interest to sue you. You aren’t easy prey anymore, and it won’t be successful in getting a default judgment against you. Continuing with the lawsuit past this point becomes an expense the collection agency can’t afford. In most cases, it will simply drop its lawsuit.

And don’t worry about the court siding against you. In this case, the Fair Debt Collection Practices Act is on your side. It doesn’t matter if you legitimately owe the debt. You can wear a t-shirt to court that reads, “I owed this debt and DIDN’T PAY IT, “ and it still doesn’t make any difference. Once the statute of limitations has expired, the game is over. The collection agency will simply have to pack up its toys and go home.

Restarting the Statute of Limitations

Keep in mind that you can restart the statute of limitations by making a payment to the collection agency, no matter how small. Thus, the statute of limitations can only be tracked from the date of your last payment on the debt to any creditor, not your last payment on the debt to your original creditor. 


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    • profile image

      Transportation Collection Agency 7 years ago

      Wonderful information. Thanks for the hub and keep up the good work.

    • Cheeky Girl profile image

      Cassandra Mantis 7 years ago from UK and Nerujenia

      The Statute of Limitations is a great piece of legislation. Great hub - and in plain talking that we can all understand.