Statute of Limitations for Contract Debts

The Statute of Limitations for lawsuits varies by state, and runs anywhere from 3 to 15 years, after which the debt is “time-barred,” and you will be unable to sue. 

You should use every legal means at your disposal, of course,  but if you wait too long and rely on a last-minute lawsuit as a hail-mary effort to collect what is due, you may be very disappointed. Time is not on your side, and there really is no good explanation for letting debt get this old.

Inevitably, the action will be stretched out, and litigation will be very expensive. The older the debt,  the more convinced a debtor will be that they will never have to pay, at least not the full amount, and the more the claim will be subject to made-up disputes, and you will have great difficulty finding witnesses to testify.  

And, of course, the present value of a recovery possibly achieved four years’ hence is much less than the amount owed. That is, if you are (i) lucky enough to prevail in court and if  (ii) the debtor is still in business when you get a judgment. 

Never let your receivables age to the point where you are concerned about the Statute of Limitations. We recommend you use your commercial collection agency to negotiate the best deal they can get for you, and then move on to new business.

Below is a rough guide only, and not legal advice. You will need to know when the Statute of Limitations begins to run, and the events that may occur that will delay it. The list below is indicative only but should be of some guidance to you; it does not cover government, injuries, or property damage. Always check the current state statutes to be sure;  here is a link to a site with more detail if you need to do some state-specific research.