March 3, 2009

While you might know that your credit report has a limit of 7 to 10 years before items are removed, the debt themselves actually might be different.  The statue of limitations is the amount of time a credit has to sue you for an unpaid debt.  It is usually starts at the time you went delinquent and the limit of  time varies from state to state.

The limit can also vary on the type of debt instrument.  Here is a brief description of each:

• Written Contracts – These are written agreements between lender and borrower.
• Oral Contracts – These are contracts that lack a written statement of payment.  They could be agreements made on a handshake.
• Promissory Note – This is a written contract for payment.  They must outline the amount of the loan, interest rate, and payment terms.  Today, a common use of promissory notes is in peer to peer loans.  Mortgages are the most commonly known form of promissory notes.
• Open - The recognized form of this type of account is a credit card.  There are no term to the agree and the debt is revolving.

State	Written Contracts	Promissory Notes	Oral	Open
Alabama	6	6	6	3
Alaska	6	6	6	3
Arizona	6	5	3	3
Arkansas	5	6	3	3
California	4	4	2	4
Colorado	6	6	6	6
Connecticut	6	6	3	6
Delaware	3	6	3	3
D.C.	3	3	3	3
Florida	5	5	4	4
Georgia	6	6	4	4
Hawaii	6	6	6	6
Idaho	5	10	4	4
Illinois	10	6	5	5
Indiana	10	10	6	6
Iowa	10	5	5	5
Kansas	5	5	5	3
Kentucky	15	15	5	5
Louisana	10	10	10	3
Maine	6	6	6	6
Maryland	3	6	3	3
Massachusetts	6	6	6	6
Michigan	6	6	6	6
Minnesota	6	6	6	6
Mississippi	3	3	3	3
Missouri	10	10	5	5
Montana	8	8	5	5
Nebraska	5	6	4	4
Nevada	6	3	4	4
New Hampshire	3	6	3	3
New Jersey	6	6	6	6
New Mexico	6	6	4	4
New York	6	6	6	6
North Carolina	3	5	3	3
North Dakota	5	6	6	6
Ohio	15	15	6	6
Oklahoma	5	5	3	3
Oregon	6	6	6	6
Pennsylvannia	6	4	4	6
Rhode Island	15	10	15	10
South Carolina	10	3	10	3
South Dakota	6	6	6	6
Tenessee	6	6	6	6
Texas	4	4	4	4
Utah	6	6	4	4
Vermont	6	5	6	6
Virginia	5	6	3	3
Washington	6	6	3	3
West Virginia	10	6	5	5
Wisconsin	6	10	6	6
Wyoming	10	10	8	8

When Does the Clock Start

That is not something that is entirely clear.  The idea is you have made an agreement with a creditor for a loan and if you violate the agreement the statue of limitations starts.  The violation would be you not paying your bill.  This makes the agreement that you have entered into the true determinate of when the statue of limitations begins.

Also is the consideration of what happens if you pay a portion of the outstanding bill.  I wrote a post in regards to paying old bills and it warned of the dangers of paying old debts.  This could restart or extend the stature of limitations.  This actually depends on the state.

Conclusion

The best practices of dealing with old debts is sometimes to consult a lawyer on how to procede. The last thing you want to face is being sued for an old debt.