Statute of Limitations for Debts: What is the Statute of Limitations in Your State?

Every state has a statute of limitations for debts. When the statute has expired creditors are limited regarding their collection efforts. The statute of limitations means that you have violated the terms of the contract by not making a payment. As soon as the payment is missed the statute of limitation starts. For the most part creditors cannot bring legal action against you in a court of law; however many still make the attempt. How long the statute is will depend on the type of debt and the state you live in.

There are primarily four types of debt that the statute of limitations applies to including oral agreements or contracts, written contracts, promissory notes, and the open-ended contract. An oral contract is a verbal agreement between two or more parties which has taken place without any documentation such as a contract. An agreement of this sort is more or less sealed with a handshake. If you end up in court regarding an oral contract you may be in for a battle since you don't have anything written to confirm that the debt actually exists.

The next type of agreement is a written contract. The contract will include all of the elements of the agreement between all parties involved. The contract is signed by the debtor and creditor which signify the fact that everyone involved has read and understand the contract and will abide by its contents.

A promissory note is the next type of contract. Promissory notes are very similar to contracts but they have an added feature; they include the payment schedule as well as the amount of interest to be paid over the life of the contract. The starting date for payments to begin and end is listed as well as the total amount of the loan which includes principal and interest. If you want to review a promissory note just take a look at your mortgage loan; this is the best example of this type of contract.

The last type of account is very familiar to many people and these are open-ended contracts. An account of this sort does not have an established payment schedule like a mortgage or auto loan. These accounts are revolving accounts. A credit card is the best example of this type of account.

In the state of Ohio the statute of limitations for the four types of debts is as follows:

Oral Contract 6

Written Contract 15

Promissory Note 15

Open-ended 6

Ohio and Kentucky have the longest statute of limitations for written contracts and promissory notes, (15 years for each type).

So what happens when the statute of limitations has passed? Creditors can send letters and make phone calls, in an attempt to collect that debt, but they cannot pursue legal action. However note many creditors, primarily collection agencies, will attempt to take you to court anyway.

What should you do if you receive a writ of summons from the court which states you must appear in court even though the statute of limitations has run out? Always go to court when this happens. When it is your turn to present your case just let the judge, or whoever is presiding over the case, know that the statute of limitations has run out. If you do this you win the case. The best way to prove your case is with a copy of your credit report which will show the date of last activity.

If you decide not to go to court, in this example, you will lose the case and the creditor will get a default judgment against you. Notice a judgment can be awarded against you even though the statute of limitations has run out if you don't go to court, (that point is worth repeating). That's why it is always best to go to court and explain the situation.

When the statute of limitations has run out there are certain things you do that can reactivate it. This will vary from state to state. Making payment arrangements or even acknowledging that the debt is yours can reactivate the statute in some states. Always check the rules and regulations in your own state to see what does and does not apply. If you still need help you may need to seek legal advice.

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