Debt Statute of Limitations in Utah
By law, a statute of limitations prohibits collection agencies from suing you for old debts. The limitation period varies for different kinds of debt and can be re-started under certain circumstances so never assume a debt collector is barred from collecting a debt under the statute of limitations simply because the applicable time period has expired. Gather your paperwork, review your payment history, review the contract, and contact an attorney before you make any payments or promises to pay if you think the debt might be too old to enforce in court.
Does a debt statute of limitations prevent debt collectors from suing?
The statute of limitations is an affirmative defense so it does not automatically apply or prevent debt collectors from seeking to collect past due debts. It is raised in court proceedings which will stop the debt collection lawsuit if the court determines that the time frame when the debt collector is allowed to file a lawsuit against you has passed. Then, the court will dismiss the case against you. If you are sued for a delinquent debt, and believe the statute of limitations might prevent the collection agency from suing to collect that debt, you must raise the statute of limitations defense when you file your answer. Because it is an affirmative defense, failing to raise it properly could cause you to lose its protections.
Can debt collectors attempt to collect a time-barred debt?
If the collection agency is not suing you but is merely attempting to collect a debt barred by the statute of limitations, things get more cloudy. Generally, the collectors may attempt to collect time-barred debts. But they can’t threaten to sue or make any deceptive representations in doing so. Threatening to sue you when the debt is time-barred or attempting to deceive you into thinking they can sue you when they can’t are violations of the Fair Debt Collection Practices Act which would enable you to sue them for damages.
For example, in a recent case Seventh Circuit Court of Appeals held that Portfolio Recovery Associates, a debt collection agency, violated the Fair Debt Collection Practices Act for using carefully crafted language in a collection dunning letter that attempted to obscure from the debtor that the statute of limitations prohibited the collector from suing or threatening to sue to collect the debt.
It is also a violation of the Fair Debt Collection Practices Act if the debt collector does anything to try to trick you into renewing the statute of limitations. As discussed below, certain acts on your part can reset the time period but debt collectors may not deceive you into taking any of those actions. Most often this occurs when debt collectors attempt to collect zombie debts that are long past the limitations period that were purchased by the collection agencies for pennies on the dollar.
What is the statute of limitations for debt?
In Utah, there are different limitation periods applicable to debt. Which particular statute of limitations applies depends on the type of debt. Generally, the statute of limitations for debt based on a written agreement is six years. Oral contracts and debts incurred for open store accounts for any goods, wares, or merchandise are enforceable in court for only four years. The longest statute of limitations in Utah for debt is an eight year statute of limitations to enforce a judgment.
There are other statutes of limitations in Utah that may apply in less common situations so please don’t consider this list to be exhaustive. And be careful with judgments because judgments can be renewed every eight years which will restart the eight year limitations period.
Is the account open ended or closed ended?
Whether the account is open ended or closed ended is a critical inquiry to determine which statute of limitations applies. Closed ended debt generally refers to single isolated transactions and will generally be subject to the six year statute of limitations for debts based on written agreements. Open ended debts may fall under the four year period for open store accounts but in many cases may fall under the six year written contracts period of time.
For example, a typical car purchase agreement would fall under the six year statute of limitations because the transaction is based on a written agreement. Conversely, a credit card issued by a retail store that may only be used to make purchases from that store will normally fall under the four year period.
The issue is more confusing when a credit card company issues a credit card based only on an application but never obtains a written agreement. Lower courts generally consider the six year period to apply. That outcome appears to be a fairly obvious misreading of the statute but unfortunately the Utah Supreme Court has never clarified this issue. Until it does, the safe assumption if you are being sued for debt is that the six year statute of limitations will be held to apply in individual cases of credit card debt. If there is any doubt at all and the debt is older than four years, contact an attorney to see if there is any way to argue the four year period applies. This is an issue that needs to be tested in court.
When does the statute of limitations begin to run?
Generally, the statute of limitations for debts based on written contracts begins to run when the first payment was due but not paid. In other words, the period starts when the contract is breached. That date could arguably be extended by applicable grace periods so be careful here if the dates are close. Also keep in mind that circumstances other than failing to make a payment can result in a breach of contract so be aware of whether any other breaches of the contract might have occurred.
For debts that fall under the four year period, the statute of limitations starts running when either the last charge is made or the last payment is received, whichever comes last.
For judgments, the eight year period begins running from the date of the judgment. If the judgment is renewed, the eight year period is also renewed.
Reviving, Waiving, or Extending the Statute of Limitations
There are several ways you can revive, waive, or extend the statute of limitations. Debt collectors violate the Fair Debt Collection Practices Act if they attempt to trick you into doing so but aggressive and abusive collectors and even collection attorneys often do anyway.
Reviving the Statute of Limitations
Making a payment on a time-barred debt will revive, or restart, the statute of limitations. Even a tiny payment will revive the debt. This is why debt collectors often ask for a token payment on old debts. And whether the debt is only a year or two old or way outside the statute of limitations does not matter. Making that token payment restarts the clock.
Making a written promise to pay the debt will also restart the statute of limitations. Again, this is why collectors will ask you for an email or letter confirming your intent to pay a debt even when they don’t demand payment. They know that written promise to pay will revive even the oldest debt.
Acknowledging the debt in writing is yet another way you can revive the statute of limitations on a time-barred debt. This is why you must avoid mainstream credit repair companies because most have no clue that a poorly written credit dispute letter can result in an acknowledgment of the debt and restart the clock.
Waiving the Statue of Limitations
As discussed previously, the statute of limitations is an affirmative defense that is waived if you fail to raise it when you are sued for the debt. This is a good reason to seek legal counsel in debt collection lawsuits. A good attorney will properly preserve and argue this, and other, applicable affirmative defenses.
Extending the Statute of Limitations
Extending the statute of limitations, also referred to as tolling, occurs when a person is no longer subject to the jurisdiction of the Utah courts. Most frequently, this occurs when a person moves out of state for a period of time and then returns. When that occurs, the time when the person was absent and not subject to personal jurisdiction is not included as part of the time limited for the commencement of the action under the statute of limitations.
As discussed above, making a payment on the debt also extends the statutory time period for collections. Because of this, some more aggressive collectors will actually make phantom payments on debt they own in the hopes of extending the statute of limitations. Yes, doing so is a violation of the Fair Debt Collection Practices Act but many don’t get caught as it is sometimes difficult to detect and prove who made the phantom payment.
What should you do if a debt collector attempts to collect a time-barred debt?
If a debt collector is attempting to collect a time-barred debt or a debt you think might be too old to collect, don’t make any payments on the debt and don’t make any promises to pay the debt. Find out if the debt is too old first. Otherwise you will reset the statute of limitations and even the oldest zombie debt will be revived. Check the paperwork and your payment history to see if the debt is too old and don’t be afraid to ask the collector for proof of the debt, the contract, and a payment history if you need copies.
If the collector has sent you letters that seem unclear whether or not they can sue you for the debt or they have threatened to sue on a time-barred debt over the phone, contact a consumer protection attorney right away. You could have a claim against the collector for violating the Fair Debt Collection Practices Act which would entitle you to make the collector pay you damages.
You should also contact an attorney if you are being sued for a time-barred or zombie debt. That way you can be sure your affirmative defenses are preserved and properly asserted and you may be able to seek damages from the debt collector.
No matter what you do, act quickly. The statute of limitations will not automatically stop debt collection for an old debt nor will it protect you in court unless you properly raise the defense. In many of these cases attempting to collect the time-barred debt may violate the Fair Debt Collection Practices Act as well which could allow you to turn the tables and obtain payment from the debt collector.