What Are Time Barred Debts?

Most people who are struggling with unpaid debts did not arrive in that unpleasant situation intentionally.  Generally it is either a series of bad choices or bad luck that leads to excessive debt problems. There certainly also are individuals who fraudulently open accounts without the intention of repaying their debts, but these criminals are the exception, not the rule.

Regardless, whether you arrived in your situation deliberately or due to unfortunate circumstances, defaulted debts can sometimes lead to very distressing consequences. One of the worst consequences of defaulted debt occurs when your debtor chooses to sue you.

Time Limits

When you initially took out your loan you likely signed a promissory note agreeing to pay back the debt, plus applicable interest and fees according to the lender’s terms. If you fail to pay back the debt according to the terms of your agreement your creditor has rights to attempt to compel you to pay. For example, your creditor may report derogatory information about you to the credit bureaus or turn your debt over to a third party collection agency. Or, your creditor may even choose to sue you.

Thankfully, federal and state governments have laws in place which typically prevent bad debt from haunting you forever. The Fair Credit Reporting Act (FCRA) is a federal law which details how long negative information may remain on your credit reports (generally 7 – 10 years based on the information category). Each state also places restrictions on how long a creditor may attempt to sue you for an unpaid debt before it becomes what’s known as “time barred.”

Additionally, it is important to note that statutes of limitation regarding credit reporting and those regarding time barred debts are completely unrelated. They’re two different things. Just because an account is still permitted to appear on your credit reports does not mean that a creditor is still able to sue you, and vice versa.

Time Barred Tables

The length of time a creditor may legally sue you for a defaulted debt is generally determined based on the state where you lived whenever the debt was initially incurred.  Therefore, if you lived in Florida when you signed a promissory note for a loan but resided in Ohio when you defaulted on the debt, the Florida statute of limitations would still most likely apply to your situation.

Here is a cheat sheet to help you determine how long a creditor may legally sue you for a defaulted debt.

Where You Lived When The Debt Was Incurred How Many Years The Creditor Can Sue You
Kentucky and Ohio 15 Years
Illinois, Indiana, Iowa, Louisiana, Missouri, West Virginia, Wyoming 10 Years
Montana 8 Years
Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Georgia, Hawaii, Kansas, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Dakota, Oregon, South Dakota, Tennessee, Utah, Vermont, Washington, Wisconsin 6 Years
Florida, Idaho, Nebraska, Oklahoma, Rhode Island, Virginia 5 Years
California, Pennsylvania, Texas 4 Years
Delaware, Maryland, Mississippi, North Carolina, New Hampshire, South Carolina, Washington DC 3 Years


Should You Pay a Time Barred Debt?

If a creditor contacts you regarding an old debt you believe to be time barred you have several options. First, if you feel the debt is legitimate and if you can afford to do so, you can settle or pay the debt and be done with it. It is a good idea to get the pay off amount or settlement offer in writing prior to sending payment. Be careful because making even a small “good faith” payment could restart the collection clock, making it legal for your creditor to sue you if desired.

However, if you are contacted regarding an old debt which you believe to be inaccurate then naturally you do not want to pay or settle the account. In fact, if you are contacted regarding such an account then you should probably check all three of your credit reports immediately to be sure that those inaccuracies are not showing upon your credit reports and hurting your scores. If the inaccuracies are on your credit, you should dispute them.

NOTE: Making a payment on a debt and/or disputing a debt will NOT restart the credit reporting clock. Absolutely nothing restarts that clock.


Better Day Consultanting, The fastest growing credit repair firm in the U.S. Call now: 833-522-0200 www.betterdayconsulting.com

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