How Long Can a Collection Agency Try to Collect a Debt?

by Tom Streissguth
Credit card and other debts carry a statute of limitations

When payments on a bill stop, creditors will assign the debt to a collection agency. The agency either buys the debt outright or works on a commission, taking a percentage of any amount it collects. The length of time a collection agency can try to collect a debt depends on a number of factors, including where the debtor lives.

Debts in Collections

A collection agency can handle a wide variety of debts, including credit cards, medical bills, utility bills and unsecured loans. A secured loan that has some kind of collateral backing, however, usually won't make its way to a collection agency because the creditor has the right to seize that property to meet the debt. This includes mortgages, car loans and certain business loans.

Statutes of Limitations

Debts are legally enforceable contracts until they reach a statute of limitations. This means that once the debt reaches a certain age, the creditor -- whether the original creditor or a collector -- can't sue you for it. Each state writes its own laws on the statute of limitations for debt. Many break this down into different debt categories, including written contracts, oral contracts, promissory notes, and open-ended contracts. The last category includes credit card accounts.

State by State

If he's going to sue you, a creditor must file a claim in your state of residence. The laws of the state in which you reside -- not where the creditor does business -- set the statute of limitations. In Arizona, for example, written contracts are enforceable for six years, while promissory notes are good for five years and open-ended accounts for three. For open-ended accounts, the statute of limitations begins to run on the day the most recent debt was due.

Collections Rules

Although time runs out on a debt, legally, a collection agency can still pursue payment. A collector can write or phone you to arrange payment, and is only limited by the Fair Debt Collection Practices Act, which sets the rules for collection agencies. This law bars undue harassment or threats, as well as misrepresentations by collectors on how much time they have to file a civil claim against you.

About the Author

Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.

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