Creditors, including collection agencies, are not free to pursue people who owe them money indefinitely. The law limits how long they have to bring a lawsuit in court. This limited window of time is known as the statute of limitations period and it varies between states. In Louisiana, this ranges from 1 to 10 years, depending on the type of debt the creditor is suing for.
Credit cards are treated as "open accounts" under Louisiana law. Generally, an open account is one in which the account holder can make purchases against an established credit limit on an ongoing basis. He receives monthly statements for the account and makes payments toward the accrued balance at least once a month. If an account holder fails to make payments, card issuers have three years to sue for the unpaid balance under the state's statute of limitations for open accounts.
If you owe back state taxes, Louisiana has three years to come after you under the statute of limitations for tax debt. The three-year period begins to run either from the date you file your state tax return or three years from the date the return was due, whichever is later. If your gross income was understated by more than 25 percent on your return, this period is extended to six years. If a false or fraudulent return is filed, there is no time limit on how long the state can pursue you. There also is no time limit if you updated your federal tax return, but didn't report the changes on your state return.
When it comes to unpaid loans, lenders have 10 years to pursue borrowers in Louisiana. That's because a loan is considered a contract under state law and the statute of limitations for contracts is 10 years, regardless of whether the contract was in writing. For example, if Mark asks Jane for a $500 loan while the two are visiting Disneyland, Jane has 10 years to sue Mark if he fails to repay her, even though the loan was based on a verbal agreement rather than a written one.
If a creditor successfully sues you in court, the judgment remains valid for 10 years. This means the creditor has 10 years to pursue you for repayment through a court order, via measures like seizing the funds in your bank accounts and garnishing your wages until the debt is paid in full. Before the 10 year period is over, creditors can return to court and renew the judgment for an additional 10 years.
- Louisiana State Legislature: Louisiana State Statutes, CC 3494
- National List of Attorneys: Louisiana Debt Collection Laws
- Free Legal Dictionary: Open Account
- Postlethewaite and Netterville: Louisiana Tax Guide
- Louisiana State Legislature: Louisiana State Statutes, CC 3501
- Louisiana State Legislature: Louisiana State Statutes, CC 3499
- Protecting Consumer Rights: Louisiana State of Limitations on Debt Collection
- FindLaw: Louisiana Civil Statute of Limitations Laws