When the Clock Starts
Debts such as personal loans, auto loans, mortgages and credit cards are subject to the six-year statute of limitations, which starts at the date of last activity. The last payment isn't necessarily the date of last activity. If you made arrangements to pay or entered into a payment agreement, that is considered activity. For example, if you respond to a debt collector's letter three years after making a payment and agree to begin repaying the debt, the clock will restart. Even acknowledging you owe the debt can be grounds to start the statute of limitations countdown all over again. If the creditor sues you within the statute of limitations and wins, they'll have up to 20 years to enforce the judgment.
Debts Sold to a Third-Party
Debts are commonly sold to third-party collection agencies. It's not uncommon for the debt to change hands many times over the six-year period. In New Jersey, however, the clock doesn't restart when a debt is sold. As long as you don't enter an agreement with the new collection agency, the last date of activity on the account is still the starting point.
Even after the statute of limitations expires, the creditor may still contact you. The unpaid debt isn't automatically forgiven or erased. While they can still call and send letters to you demanding payment, however, creditors can't threaten to sue at that point. If you think a time-barred debt has exceeded the statute of limitations, you have a right to ask the creditor. Federal law requires the debt collector to answer honestly. If a debt collector breaks the law and sues or threatens to sue, file a complaint with the New Jersey Attorney General and the Federal Trade Commission.
Exceptions to State Statutes
Some debts follow federal statutes of limitations rather than state. The statute of limitations for IRS tax collections is 10 years from the date of assessment. Parents have the right to collect back child support payments even after the child is considered a legal adult. However, state statutes of limitations dictate how long you have to enforce a child support order or establish paternity. New Jersey has no statute of limitations for enforcing child support debt. Federal student loans have no statute of limitations, but private student loans are subject to New Jersey's six-year statute of limitations.