Alabama's Statute of Limitations for the Collection of Debt

Alabama's statute of limitations limits the number of years creditors have to take you to court over an unpaid bill or breach of contract. After the statute of limitations is up, creditors can no longer sue for repayment. If a creditor sues and wins a judgment before the statute of limitations is up, he has up to 20 years to collect the debt.

In Alabama, the statute of limitations for an oral contract is six years. Oral contracts are legally binding, but the existence of a verbal agreement is often tough to prove in court. Examples of oral contracts include an agreement to pay someone to mow your grass or a loan between friends. The presence of a third party who witnessed the agreement helps strengthen the case for an oral contract.

Written contracts in Alabama also have a six-year statute of limitations. A written contract is an agreement between parties, typically a debtor and creditor, or buyer and seller. Each party must sign the contract for it to be legally valid. Examples of written contracts include auto and personal loans, rental agreements and leases, cell phone contracts and agreements to receive medical services.

The statute of limitations for promissory notes is six years in Alabama. A promissory note is similar to a contract, except it usually includes a repayment and amortization schedule. Promissory notes are often used for unsecured loans, such as borrowing cash. Although you're required to sign a promissory note to receive a federal student loan, there is no statute of limitations for collection if you default on the loan.

Credit cards fall under the category of open-ended accounts. In Alabama, credit cards and other open-ended accounts, such as home-equity lines of credit, are subject to a three-year statute of limitations. The clock begins ticking on the date of the last activity on the account, generally the last payment you made. The date of last activity can also be any communication with the creditor, such as acknowledging the debt or agreeing to pay.