How does the statute of limitations work in a debt collection suit? What does it stop collectors from doing?

Statute of limitations in debt collection suits — how does it work and what does it do for me?

How does the statute of limitations work in a debt collection suit?  What does it stop collectors from doing?Statute of limitations (sometimes abbreviated SOL) is the time period a debt collector has to sue you.  If it goes beyond this time, it is too late and the suit can be easily defeated.

But let’s clear up some confusion about the statute of limitations.  We often get a question like this:

“What is the statute of limitations for a credit card lawsuit because I’m being sued for a debt from ten years ago and I think that’s too old to sue me.”

We then find out there was a lawsuit 6 years ago and a judgment 4 years ago.  Now the collector is trying to collect.  So what impact does the statute of limitations have?

Does it mean the time period to serve you?  

Or give you discovery such as depositions or interogatories or other forms of discovery?

Or maybe it has to do with the time period to get the case to trial?

If not the above, then how about the time period to credit report?

The time period to collect on a judgment?

Let’s look at each one of these.

It does not apply to when you are served with the lawsuit.

Once a lawsuit is filed, then you should be served with the lawsuit.  And while there are time limits to get you served, those limits are not the statute of limitations.  The judge can adjust the time to get you served.  I’ve seen judges give a debt collector many years to get someone served.  

So we don’t count the days or years from when the statute started to the time you were served.  Served with the lawsuit is important but it is not what we are talking about in this article.  All that matters is was the lawsuit filed within the SOL.

Statute of limitations does not apply to when you are deposed or served with discovery.

Sometimes people are sued and then served with discovery.  And they look at the statute and compare that to when they were served with discovery but these have nothing to do with each other.

The judge will set time limits for discovery but this is completely different than the statute of limitations.

The trial date has no relationship with the SOL.

The date of trial is set by the judge.  It may be a few weeks after you answer the lawsuit or it can be ten years later.  The date of the trial does not impact the statute of limitations at all — they are totally separate concepts.

The time period for credit reporting has nothing to do with the statute of limitations.

Sometimes people mistakenly call the time period to report on your credit report as a “statute of limitation” but it is not.  There is a time period to report — generally 7 years from the first major delinquency.  And that is normally 6 months of not making payments.

But this is only to credit report negative information.  It has nothing to do with the time limit to file suit.

How long a debt collector or creditor can collect a judgment is completely unrelated to the SOL.

Let’s say a debt buyer sues you and wins.  Now it has a judgment against you (unless you appeal from small claims or district court to circuit court).  With that judgment, can come garnishments and even a sheriff’s sale of your home.  

Judgments are normally valid for 10 years in Alabama and then can be renewed for another 10 years.  So that’s 20 years in total.

It is common for people to confuse this 20 year time period and the statute of limitations.

Here’s an example.

You default on your credit card in 2010 and get sued in 2012.  A judgment is entered in 2013.  Now in 2020, the collector is garnishing.

This is 10 years after default which is beyond the SOL but we stopped caring about the SOL when suit was filed.

So the statute of limitations has no meaning in the collection of a judgment.

Statute of limitations only means how long a company has to file the case — nothing else.

This is the key point.  Look at the time period — that’s how long the company has to sue.  The moment it sues, we compare that day with the time period in the SOL.  Either it was filed in time or it wasn’t.  It it was filed too late, you have a great defense.

Hopefully you found this article helpful — focus on the filing date of the lawsuit and compare that to the SOL.  The SOL varies based on what type of debt you are being sued for.  Here are a few examples to help.  

Most car purchases from a dealership are 4 years.

Most credit cards are either 6 years (what collectors say) or 3 years (what we say).

Let us know if you have any questions and thanks for reading this article!

John Watts

PS — if you want to get in touch with us, fill out our contact form or call us at 205-879-2447 thanks!

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