Statute of Limitations for Debt in North Carolina
The statute of limitations (SOL) for debt collection in North Carolina is based on state law and sets a time limit for creditors to sue for unpaid debts. Here’s how it works:
What State’s Statute of Limitations Applies?
The applicable statute of limitations can vary depending on several factors:
- The state where the loan was originally taken out.
- The state where the debtor currently resides.
- The state specified in the contract.
The court will determine which state’s statute of limitations applies, making it a tricky situation that often requires legal guidance.
What is the Statute of Limitations?
The statute of limitations is the time period creditors have to sue a debtor for breach of contract. After this time, the debt becomes “time-barred,” meaning creditors cannot win a lawsuit if the debtor raises the SOL defense in court.
- Three years for most oral, written, and unwritten contracts.
- Five years for contracts involving the sale of goods.
- Ten years for contracts “under seal.”
It’s important to note that the statute of limitations only limits the time creditors have to sue you. You can still be sued after this period, but you must use the SOL as an affirmative defense in court.
Confusing Aspects of the Statute of Limitations
- Credit Reporting: The statute of limitations is different from how long debts appear on your credit report. Under the Fair Credit Reporting Act (FCRA), debts can remain on your credit report for up to seven years, regardless of the SOL.
- Collection Attempts: Even though creditors can’t sue after the SOL has expired, they can still attempt to collect the debt.
- Judgments: If a creditor sues and wins a judgment, the SOL no longer applies. A judgment in North Carolina lasts 10 years and can be renewed indefinitely.
The Statute of Limitations Can Be Reset
The SOL can restart if certain actions are taken, such as:
- Making a payment: Even paying one penny restarts the clock, as it acknowledges the debt.
- Written or verbal promises: In North Carolina, even a verbal promise to pay a debt can reset the SOL and void the defense.
To fully understand your rights and how the statute of limitations applies to your debt, consult a knowledgeable attorney.
