Statutes of Limitations Frustrate Debt Collectors and Consumers

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The patchwork of statutes of limitations for consumer debt covering the United States often causes confusion for not only consumers, but also for creditors and debt collectors.

In a feature article on, writer Fred Williams explores the issue of multiple statute of limitations laws across the 50 states and District of Columbia.

The piece notes that 17 states have statutes of limitations for credit card debts of three or four years, while 19 other states set the limit at six years. Other states have various limitations, with some extending to 10 years. (see: insideARM Statute of Limitations table)

The statute of limitations (SoL) is extremely important for both consumers and debt collectors. Per the Fair Debt Collection Practices Act (FDCPA), a debt that is beyond the SoL is not legally enforceable, meaning a creditor or debt collector cannot file suit to collect on the account. But determining which state’s SoL governs a particular account can be maddening.

Banks have argued that the state in which they are incorporated governs the credit they extend to customers. Consumer advocates argue that the state in which a consumer lives when a suit is filed (not when the account is opened) is the correct standard. Some even take a position that if there is a question, the shorter SoL should be applied.

Calls for a universal statute of limitations in the U.S. have become more common in recent years.

Debt collection industry trade association ACA International proposed a universal statute of limitations for the U.S. in its 2011 plan “The Path Forward: ACA International’s Blueprint for Modernizing America’s Consumer Debt Collection System.” ACA argued that the universal SoL should be seven years to align with the standard set by private credit reporting agencies.

The FTC also mentioned a universal statute of limitations in its 2010 report on the legal collections channel, “Repairing A Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration.” Although a specific recommendation on duration was not mentioned, the topic came up at a series of discussions held by the FTC the previous year. Consumer advocates suggested a shorter timeframe (three years), while ARM and bank industry representatives wanted a universal SoL closer to seven years.

The article contains numerous examples of case law on the subject, including consumer attorneys that actively try to redefine the statutes through court cases.


Continuing the Discussion

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  • avatar Chris Bradbury says:

    I suppose since one side wants 3 years and the other wants 7, that the idea of compromising at 5, making it universal, and changing the law now is out of the question. Sometimes the answers seem so easy that it can make one wonder…

  • avatar Collection Veteran Since 1964 says:

    While the debate goes on and for future reference, a uniform definition on what starts the statue of limitations should be included. Some states use event of default, some states use last payment date, and some states have different definitions when an event takes place to re-start the tolling of SOL. For example a promise to repay can restart the tolling period or a payment applied that restarts the tolling period. Lastly, and seemingly forgotten, is when the tolling period begins or ends if a bankruptcy filing occurs and down the road the case is dismissed. What triggers the SOL? Is it from the dismissal date, or when the account went into default before the filing or the last payment made before the filing?

  • avatar jessie-gomez says:

    The consumer will always want a shorter statue of limitation period so they can go out and screw the creditor again. I think there should be 10 years straight across the board in all states and that time should start at the first day the account go in default.

  • avatar mark-norych says:

    The Supreme Court has previously held that a Statute of Limitation is considered to be a procedural law. As a result, since virtually all suits against consumers are brought where they live, it is that State’s Statute of Limitations that applies.

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