In Indiana, as in all states, creditors are limited to how long they can pursue debts owed to them. Generally, this period ranges from two to 20 years, depending on the type of debt involved. If a creditor fails to bring a lawsuit against you within the allotted time, it loses its right to sue you for the debt later.
How Statute of Limitations Work
If you owe money to a creditor or a collection agency, it has a limited amount of time to take you to court to sue you for this obligation. This is known as the statute of limitations, and it differs from state to state and depending on the type of debt involved. Generally, the statute begins to run from the date your payment is due and you fail to pay. Creditors can't sue you after the time allowed for lawsuits has ended.
In Indiana, written contracts for money have a statute of limitations of six years. Because credit card agreements fall under this category, creditors only have six years to sue you for credit card debt you owe. For example, if you stopped paying your credit card bill on Jan. 1, 2020, when payment was due, the card issuer has until Dec. 31, 2026, to sue you for the balance owed. If it attempts to sue you on Jan. 5, 2027, for instance, the lawsuit will be thrown out of court because it was not brought within the statute of limitations period of six years.
If you fail to pay taxes in Indiana, the state can place a lien on property you own in the state. This can include such things as cars, homes and commercial property. If you sell the property, the proceeds will first be used to pay the lien before any money is transferred to you. Once the tax lien is put in place, it remains until you pay the balance owed. In other words, there is no statute of limitations on how long a tax lien can stay on your property. The lien's release is solely based on when you pay what is owed. If a lien is placed on your property because you owe federal taxes, it remains in place until the debt is paid or the 10-year federal statute of limitations period ends. The federal statute begins to run from the date the tax was assessed.
If a creditor sues you in court and is successful, Indiana law gives it 10 years to collect that judgment under its statute of limitations for court judgments. This is one way creditors can extend the time they have to come after you for money owed. Once a creditor has a court judgment, it can employ such tactics as garnishing your wages and seizing funds in your bank accounts until the balance is paid. In addition, the creditor can go back to court when the 10-year period is coming to an end and extend the judgment for an additional 10 years.
Restarting Statute of Limitations
Even when a creditor is barred from suing you because the statute of limitations has run, certain actions you take may inadvertently restart the clock. These include making a payment on the time-barred debt, transferring some or all of the old debt onto a credit card or acknowledging the debt. Take any of these actions and the statute of limitations clock starts all over again, which means the creditor now has additional years to bring a lawsuit against you.
- Protecting Consumer Rights: Indiana Statute of Limitations on Debt Collection
- FindLaw: Indiana Civil Statute of Limitations Laws
- Internal Revenue Service: Internal Revenue Manual, Part 5, Chapter 17, Section 2 - Federal Tax Liens
- State of Indiana, Department of Financial Institutions: Collection of Old Debts