A creditor has only a limited time in which to file a lawsuit to recover unpaid debts. In legal terms, this is known as the statute of limitations. There are four categories of time-barred debts in Georgia -- oral contracts, written contracts, promissory notes and open-ended accounts. State laws set the statutes of limitations for each type of debt. Once the time limit runs out, the creditor can't sue, but may still contact you for repayment.
In Georgia, oral contracts, or verbal agreements, have a four-year statute of limitations. An oral contract is often an agreement to repay money you borrowed without creating a written contract -- usually a handshake or your word seals the deal. Although oral contracts are legally binding in Georgia, they are much harder to prove than written contracts since it is a matter of the lender's word against yours.
Written contracts have a six-year statute of limitations. Any written agreement with a creditor is a written contract. Some examples include cell phone service contracts and auto purchase agreements. The statute of limitations isn't extended when a debt is sold by the original creditor to a collection agency. However, the six-year clock can be extended for various reasons, such as making a partial payment or renewing a promise to pay. Simply acknowledging the debt can be grounds for the creditor to set the clock back another six years.
Promissory notes have a six-year statute of limitations. A promissory note is a written promise to repay a specific amount of money. Although similar to a written contract, the main difference is that a promissory note spells out the payment schedule and interest due on the loan. Promissory notes are commonly associated with mortgage loans.
An open-ended account is a revolving account with a balance that varies monthly. Credit cards are the most common open-ended accounts and usually have a six-year statute of limitations. In the 2008 Hill v. American Express case, the Georgia Court of Appeals ruled the statute of limitations for collecting overdue credit card debt is six years after the balance becomes due.
If someone writes you a check with insufficient funds, Georgia law requires you to send him a demand letter. This letter informs him the bank dishonored the check and indicates the amount due, along with service and bank fees. It must be sent by certified mail within 90 days of receiving the check. If you are not paid within 10 days, you can file a civil lawsuit to collect the funds. There is a four-year statute of limitations for civil debt collection in Georgia.
- Bankrate: State Statutes of Limitations for Old Debts
- Financial Web: Open-End Credit Accounts
- Nolo: Time-Barred Debts: When Collectors Cannot Sue You for Unpaid Debts
- Nolo: Chart: Statutes of Limitations in All 50 States
- Council of Magistrate Court Judges: Procedures for Criminal and Civil Prosecutions of Deposit Account Fraud
- Find Law: Georgia Civil Statute of Limitations Laws
- Governor's Office of Consumer Protection: Eight Things Debt Collectors Won't Say