Every state puts a limit on how long someone has to sue you for an unpaid debt. Further, within each state, the so-called statute of limitations that applies to a debt depends on what kind of debt it is. In Iowa, most debts have a five- or 10-year limit.
Written and Unwritten Contracts
Under Iowa state law, creditors have 10 years to sue for any unpaid debt that stems from a written contract. For debts based on oral agreements, the statute of limitations is five years. In general, the "clock" on an unpaid debt starts running when you miss a payment. Some states allow their statutes of limitations to be "tolled" under certain circumstances. Tolling means the clock temporarily stops running for some reason, such as the debtor leaving the state. Iowa law, however, generally does not allow tolling of time limits on debt.
The rules for credit card debt are a bit complicated in Iowa. Under a state appeals court ruling from 2011, the 10-year statute of limitations applies only if the creditor can produce a contract signed by the card holder. If it can't, the five-year statute of limitations applies. A generic card agreement is not enough to count as a written contract in such cases. Also, state law says that with "open-ended" debts such as credit cards, the clock starts with the most recent activity. If you make a payment on a delinquent account, the clock starts over again.
In general, the state's statute of limitations for debt arising from a court order or judgment is 20 years. This does not apply, however, to orders involving child support, spousal support or the division of marital assets. There is no limitation on such debts. A "deadbeat" parent, for example, who refuses to pay child support can't wait out the debt. It will be owed until paid.
Secured vs. Unsecured
The statutes of limitations on debt are mostly of concern for unsecured debt -- debt that isn't backed by collateral. With secured debts such as mortgages and auto loans, the creditor can seize and sell the collateral. If that doesn't raise enough money to cover the debt, Iowa law allows the creditor to sue to recover the deficiency. According to the legal information site Nolo, gaining a "deficiency judgment" in Iowa is so difficult and time-consuming that most lenders don't bother.
The statute of limitations for student loans depends on the type of loan involved. Government student loans fall under federal law — and there is no statute of limitations on government loans. With private student loans, the state limitations apply. Student loans are always based on a written contract, so the statute of limitations in Iowa is 10 years.
Collection Efforts Still Allowed
When the time limit runs out on a debt, a creditor can no longer sue you but can try to collect by other means. That means you may continue to receive phone calls, collection notices and other contacts. Under federal law, collectors can't lie to you or threaten action they can't legally take. If you ask whether a debt is "time barred," meaning the time limit has passed, the collector must either answer truthfully or not answer at all. Since you can't be sued for a time-barred debts, it's against federal law for collectors to threaten to take you to court over one.
- Nolo: Is There a Statute of Limitations for Private Student Loans?
- Nolo: What's the Difference Between a Recourse and Nonrecourse Loan?
- Federal Trade Commission: Time-Barred Debts
- U.S. Federal Trade Commission. "Time-Barred Debts." Accessed Feb. 6, 2020.
- U.S. Federal Trade Commission. "Fair Debt Collection Practices Act." Accessed Feb. 6, 2020.
- Credit.org. "Complete Guide to the Statute of Limitations on Debt." Accessed Feb. 6, 2020.
- FICO. "Errors on Your Credit Report." Accessed Feb. 6, 2020.
Cam Merritt is a writer and editor specializing in business, personal finance and home design. He has contributed to USA Today, The Des Moines Register and Better Homes and Gardens"publications. Merritt has a journalism degree from Drake University and is pursuing an MBA from the University of Iowa.