Every claim for money comes with a deadline for filing suit. Once it passes, the creditor can still ask to be paid, but it can no longer use the courts to force payment. For consumer debts in California, that deadline is short enough that it often decides the outcome of a case.
It is also widely misunderstood. The statute of limitations does not erase the debt, it does not apply itself, and once a judgment is entered a much longer clock takes over. This article explains the rules in the order they come up.
Not the Same as the Credit Reporting Period
The seven-year period for negative items on a credit report comes from a separate federal law and runs on its own schedule. A debt can be too old to sue on and still appear on your credit report, or it can drop off the report while a creditor still has time to sue. When people say a debt is “too old,” it is worth asking which of the two clocks they mean.
The Clock
Knowing which deadline applies and when it began to run.
How long
- Written agreements: four years. Most credit card, personal loan, and auto loan debts fall here. Claims framed as an open book account or an account stated generally carry the same four years.
- Oral agreements: two years. These are less common for consumer debt.
- Other claims. Some claims, such as those based on fraud, have their own periods.
When it starts
The clock usually starts when the debt goes into default, which for most accounts is shortly after the last payment. It is not measured from the date the account was opened, the date it was charged off, or the date it was sold. A sale to a debt buyer does not start a new clock; the buyer takes the account with the time already used.
Agreements governed by another state’s law
If a debt arose under another state’s law and that state allows less time to sue, California’s borrowing statute can apply the shorter period. Many credit card agreements choose the law of the state where the bank is based. Whether that changes the answer depends on the agreement and the facts.
- The date of your last payment
- The date the account was charged off
- The date any lawsuit was filed
Collection letters and credit reports often show the first two.
What Moves the Clock
Understanding what can extend the deadline, and what cannot.
Payments before the deadline runs
A payment made while the period is still running generally moves the default date forward, because the account was current through that payment. The clock then runs again from the next missed payment.
Written acknowledgment
A signed, written acknowledgment of the debt, or a written promise to pay it, can extend the period. A spoken promise on a collection call generally does not have that effect under California law.
Payments after the deadline has passed
In California, a payment or acknowledgment made after the period has expired does not revive the right to sue on a consumer debt. Collectors sometimes suggest otherwise.
Pauses
Some events pause the clock, such as a bankruptcy case that was filed and later dismissed. California also has an old rule pausing the period while a debtor is out of the state, but courts have narrowed it considerably, and it rarely affects an ordinary consumer debt.
If a collector asks for a token payment on an old account, check the dates first. A payment on a debt that is still within the period can move the default date and give the creditor more time to sue. Talk to us before paying, not after.
Time-Barred Debt
What a collector may and may not do once the deadline has passed.
The debt still exists
An expired statute of limitations does not cancel the debt. Collectors may still contact you and ask for voluntary payment, within the rules that govern collection conduct.
No lawsuit, and no threat of one
Federal rules prohibit a debt collector from suing, or threatening to sue, on a time-barred debt. California law goes further and prohibits filing suit on a consumer debt once the period has run, whether the plaintiff is a collector, a debt buyer, or the original creditor.
Required notice
California requires a collector writing to you about a time-barred debt to include a notice explaining that, because of the age of the debt, you will not be sued for it, and how its age affects credit reporting. A collector that leaves out the notice, or threatens suit anyway, may be violating the law. Our guide to what debt collectors may not do covers the remedies.
Credit reporting
Paying a time-barred debt does not remove it from your credit report, and it does not shorten the reporting period. Whether to pay is a personal decision; it should be an informed one.
Using It in Court
Raising the deadline as a defense, because the court will not raise it for you.
It must be pleaded
The statute of limitations is an affirmative defense. If a creditor sues on an expired debt and you do not file an answer that raises it, the defense is lost. A default judgment on a time-barred debt is still an enforceable judgment.
Proving the dates
The defense turns on two dates: when the claim accrued and when the suit was filed. In a debt buyer case, California requires the complaint to state the date of default or of the last payment, so the dates are often on the face of the complaint. When they are not, discovery can require the plaintiff to produce the account history. A plaintiff that cannot document the dates has a problem.
Late is late
A lawsuit filed even a few days after the period ran is too late. We count from the actual default, not from the charge-off date, which is often several months later.
The time to respond is short, usually 30 days from service. Our guide to being sued by a debt collector explains the answer and the other defenses that belong in it.
Judgments Are Different
Understanding the much longer life of a court judgment.
Ten years, and renewable
Once a creditor wins a judgment, the four-year clock no longer matters. A California money judgment is enforceable for ten years from entry. Before it expires, the creditor can renew it for another ten years with a simple filing, without a new lawsuit.
Interest
Judgments accrue interest at a rate set by statute, so the balance can grow while the judgment sits unpaid. California sets a lower rate for many consumer debt judgments than for other judgments.
Recent limits
Recent California legislation restricts the renewal of some consumer and medical debt judgments. Whether a particular judgment can be renewed depends on when it was entered and what it was for, and we check before assuming it can be.
Old judgments resurface
A judgment entered by default years ago can reappear as a bank levy or a garnishment long after you had forgotten the debt. If you never knew about the case, a motion to set the judgment aside may be possible. Judges rarely set aside a default judgment that was entered years ago, however, so the motion has to be brought promptly once you learn of the judgment, and it has to explain convincingly why you did not know. Bankruptcy can also discharge most judgments for consumer debt; see our Chapter 7 guide.
Which Clock Applies?
| Situation | Period | Runs from |
|---|---|---|
| Credit card or written loan | Four years to sue | The default, usually after the last payment |
| Oral agreement | Two years to sue | The default |
| Court judgment | Ten years to enforce, renewable | Entry of the judgment |
| Credit report | About seven years | The first delinquency |
What It Costs
Checking whether a debt is time-barred is part of our first meeting about a collection problem.
When the answer leads to work, such as responding to a collector or filing an answer that raises the defense, that work is usually handled for a flat fee. Litigation beyond the answer is usually billed hourly, with a retainer. The arrangement is set out in a written agreement before work begins.
- Collection letters about the account, including envelopes if you kept them
- A recent credit report
- Your last statements from the original creditor
- Any record of payments, including the last one you made
- Lawsuit papers, if you have been sued
Gregory Grigoryants is a California attorney (State Bar No. 286804) who has represented individuals, families, and business owners in bankruptcy, debt collection defense, and tax resolution matters for more than 13 years. He practices from offices in Sherman Oaks and Beverly Hills and speaks English and Russian.