When Does the Statute of Limitations Clock Start?

Debt collectors can use a variety of tactics to pursue you for a debt, but some tools have an expiration date. In particular, collectors have a limited amount of time to sue for old debts. The amount of time the debt is legally enforceable is known as the statute of limitations. Once the time period is up, debt collectors are no longer allowed to use the court to force you to pay for old debts.

The specific statute of limitations for your debt is based on two factors: the type of debt you have—e.g. credit card or loan —and the state where you live or the state the debt was incurred.

When Does the Statute of Limitations Clock Start?

The statute of limitations clock starts ticking on the date of last activity on your account. Typically this is the date you last made payment, but it can also be the date you last used the account, made a promise to pay, entered a payment agreement, or even acknowledged liability for the debt.

A debt collector may still file a lawsuit against you after the statute of limitations has passed. If you are sued for an old debt, your attorney can use the expired statute of limitations as a defense to avoid a judgment being entered against you. Knowing when the clock on the statute of limitations starts will help you calculate whether the statute of limitations has expired and help you decide whether to pay off an old debt or leave it alone.

Figuring Out the Statute for Your Debt

When you're trying to figure out when the statute of limitations clock started, your credit report is a good place to start. It will have the last activity you made on the account according to the creditor or debt collector.

There are limits to using your credit report to gauge the statute of limitations. Since your credit report is based on payment and transaction activity reported by your creditors, it's only useful for the statute of limitations when some type of account activity was the last time you did anything on the account.

Verbal activity, like a payment arrangement made with the collection or acknowledgment of the debt, isn't reported to the credit bureaus, so only your notes or records (if you've kept them) can help you know for certain when the last activity was on the account.

You can ask the creditor or collector for the last date of activity on the account. While they're not required to give you an answer, they must answer truthfully if they decide to give you an answer. 

Statute of Limitations vs. Credit Reporting Time Limit

The statute of limitations is often confused with the credit reporting time limit, which is the amount of time an old debt can be included in your credit report. The credit reporting time limit is always based on the date of the last missed payment on the account. Your credit report will include the date of the missed payment for credit reporting purposes.

The statute of limitations can still be in effect even if the credit reporting time limit has passed. In some states, the statute of limitations is more than seven years. Or, you may have restarted the statute of limitations by taking an action, like making a payment arrangement, that's not recorded on your credit report.