A statute of limitations (SoL) is a law that sets a maximum period of time for which a claim or action can be filed in a court of law. These periods are set by, and vary by state and type of legal action.
Because a contract is signed, vehicle purchases fall under the written contract clause of each state’s statute of limitations.
The statute of limitations becomes effective on the date of the last activity on an account. In most cases, this means on the date of the last payment made. However, entering an additional agreement, either written or verbal, with the debt holder will reset the statute of limitations.
How SoL Affects You
Once the statute of limitations expires, debt collectors can no longer file a lawsuit against you in an attempt to collect on the debt. This does not mean you do not still owe the debt, it simply means that debt collectors have no legal means to force your repayment of the debt.
Each state has established its own time limit on SoLs, with the average being six years. Kentucky and Ohio have the longest limit at 15 years, while North Carolina and South Carolina have the shortest at only three years.
- Statute of Limitations
- State Statutes of Limitations for Debt Collection
- Understanding Vehicle Financing
- Federal Trade Commission Consumer Information. "Time-Barred Debts." Accessed Feb. 29, 2020.
- Federal Trade Commission. "Fair Credit Reporting Act § 605. Requirements Relating to Information Contained in Consumer Reports," Pages 22-23. Accessed Feb. 29, 2020.
- Consumer Financial Protection Bureau. "What is the Statute of Limitations on a Debt?" Accessed Feb. 29, 2020.
- Federal Trade Commission. "Under FTC Settlement, Debt Buyer Agrees to Pay $2.5 Million for Alleged Consumer Deception." Accessed Feb. 29, 2020.
Katrina Arthurs began her writing career in 1999. She served as a columnist for the "Edgewood News Herald" then as a reporter and production manager for the "KC Conservative." Arthurs is pursuing her Bachelor of Science in criminal justice at the University of Central Missouri.