One of the key issues in collecting a debt is how long you have the remedy of using the court system to collect on that debt. The statute of limitations for collecting a debt is divided into two time periods. The first group of debts fall under a six year statute of limitation. These are general debts in the normal course of business not pursuant to a contract. The second and more comprehensive group of debts falls under a four year statute of limitations. These debts are those incurred by an oral contract, written contract, note, mortgage, guaranty, surety, or credit cards. However, the above mentioned limitations are a general guideline as different states apply various time periods. Please see the table below for state-specific information.
One of the key questions in analyzing whether you can use the court system to collect the debt is determining the date that the statute of limitations begins to run. That date can be interpreted as either the day that the transaction occurred between the parties creating the debt or the date that the debtor failed to pay under the terms and conditions of the transaction that created the debt. The Pennsylvania courts have stated that:
Generally speaking, the statute of limitations begins to run as soon as the right to institute and maintain the suit arises. Sevast v. Kakouras, 591 Pa. 44, 53, 915 A.2d 1147, 1153 (2007). (citation omitted) In an action for breach of contract, the statute begins to run on the date the action accrues—the date of the breach.
McGaffic v. City of New Castle, 973 A.2d at 1052 (Pa Commw. 2009).
Crumm v. K. Murphy & Co. Inc. 2009 WL 6057715 (Pa.Com.Pl. 2009)
It is customary for businesses to have a policy that a debt may be paid within 30, 60, and in some cases 90 days. Under the law, the courts could rule that it is at the conclusion of those 30, 60, or 90 days that the statute of limitations begins to run. However, in the interest of protecting our clients we would advise that all suits be brought from the date that the debt was created so as to prevent any contest in the courts over the starting point of the statute of limitations.
The law provides these time limitations upon which the courts can be used to collect a debt. If a legal action is not brought within the time period allowed by the statute of limitations, that eliminates the right to a legal remedy for collection, however, it does not eliminate the debt owed. It just means that you would lose the ability to use a lawsuit to collect a debt.
For Statutes of Limitations on judgments, go here. Please note that this table was updated in June of 2012.*
|
State |
Oral |
Written |
Promissory |
Open-ended Accounts |
State Statute: Open Accounts |
|
AL |
6 |
3 |
6 |
3 |
|
|
AR |
3 |
5 |
3 |
5 |
|
|
AK |
6 |
3 |
3 |
3 |
|
|
AZ |
3 |
6 |
6 |
6 |
|
|
CA |
2 |
4 |
4 |
4 |
|
|
CO |
6 |
6 |
6 |
6 |
|
|
CT |
3 |
6 |
6 |
6 |
|
|
DE |
3 |
3 |
3 |
3 |
|
|
DC |
3 |
3 |
3 |
3 |
|
|
FL |
4 |
5 |
5 |
4 |
|
|
GA |
4 |
6 |
6 |
4** |
|
|
HI |
6 |
6 |
6 |
6 |
|
|
IA |
5 |
10 |
5 |
10 |
|
|
ID |
4 |
5 |
5 |
5 |
|
|
IL |
5 |
10 |
10 |
5 or 10*** |
|
|
IN |
6 |
10 |
10 |
6 |
|
|
KS |
3 |
3 |
3 |
3 |
|
|
KY |
5 |
15 |
15 |
5 or 15 |
|
|
LA |
10 |
3 |
10 |
3 |
|
|
ME |
6 |
6 |
6 |
6 |
|
|
MD |
3 |
3 |
6 |
3 |
|
|
MA |
6 |
6 |
6 |
6 |
|
|
MI |
6 |
6 |
6 |
6 |
|
|
MN |
6 |
6 |
6 |
6 |
|
|
MO |
5 |
5 |
5 |
5 |
|
|
MS |
3 |
3 |
3 |
3 |
|
|
MT |
5 |
8 |
8 |
8 |
|
|
NC |
3 |
3 |
5 |
3 |
|
|
ND |
6 |
6 |
6 |
6 |
|
|
NE |
4 |
4 |
4 |
4 |
|
|
NH |
3 |
3 |
3 |
3 |
|
|
NJ |
6 |
6 |
6 |
6 |
|
|
NM |
4 |
4 |
4 |
4 |
|
|
NV |
4 |
4 |
4 |
4 |
|
|
NY |
6 |
6 |
6 |
6 |
|
|
OH |
6 |
6 |
6 |
6 |
|
|
OK |
3 |
3 or 5 |
5 |
3 or 5 |
|
|
OR |
6 |
6 |
6 |
6 |
|
|
PA |
4 |
4 |
4 |
4 |
|
|
RI |
10 |
10 |
10 |
10 |
|
|
SC |
10 |
10 |
3 |
3 |
|
|
SD |
3 |
6 |
6 |
6 |
|
|
TN |
6 |
6 |
6 |
6 |
|
|
TX |
4 |
4 |
4 |
4 |
|
|
UT |
4 |
6 |
6 |
4 |
|
|
VA |
3 |
5 |
6 |
3 |
|
|
VT |
6 |
6 |
5 |
6 |
|
|
WA |
3 |
6 |
6 |
6 |
|
|
WI |
6 |
6 |
10 |
6 |
|
|
WV |
10 |
10 |
10 |
10 |
|
|
WY |
8 |
10 |
10 |
8 |
Oral Contract: You agree to pay money loaned to you by someone, but this contract or agreement is verbal (i.e., no written contract, “handshake agreement”). Remember a verbal contract is legal, if tougher to prove in court.
Written Contract: You agree to pay on a loan under the terms written in a document, which you and your debtor have signed.
Promissory Note: You agree to pay on a loan via a written contract, just like the written contract. The big difference between a promissory note and a regular written contract is that the scheduled payments and interest on the loan also is spelled out in the promissory note. A mortgage is an example of a promissory note.
Open-ended Accounts: These are revolving lines of credit with varying balances. The best example is a credit card account. Please note: a credit card is ALWAYS an open account. This is established under the Truth-in-Lending Act:
*The material provided in this table for informational purposes only and should not be construed as legal advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.