What is the Statute of Limitations for Debts in North Carolina?

Aug 03, 2011 40 Comments by

You might be wondering exactly what “statute of limitations” means.  The statute of limitations is the time period a creditor can still sue you for debts. Creditors only have a certain duration of time they can attempt to collect a debt by suing you. If the creditor fails to successfully collect the debt or file a lawsuit before expiration of the statute of limitations, then the debt is no longer applicable for collection by a lawsuit against you.

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In North Carolina, Section 1-52.1 of the North Carolina Rules of Civil Procedure explains the statute of limitations for debts is 3 years for auto and installment loans, promissory notes, and credit cards.  This means if a creditor is going to sue you, they must do so within three years from the date of your last charge or activity on the card. Now the magic question is, what is activity on the card? This is a source of litigation throughout the state.  There are many times no clear-cut answer to this question. The creditor may claim there was activity on the credit card or personal loan within the past three years before the lawsuit was initiated. It would then be your word against their word as to when the last activity on the card took place.

The law states after the three years has passed, if the creditor has not sued you for the debt, they are barred from filing a lawsuit against you for that debt.  However, they may still call and request a payment from you. They cannot successfully sue you if the statute of limitations has expired and you raised that defense in your legal response to the lawsuit.

Now let’s clarify this last statement. Anyone can sue anyone! So the fact is they may sue you on the debt, but you have the defense on the lawsuit the statue limitations had expired and the lawsuit should be thrown out of court. However, to raise this defense of the statute of limitations against the lawsuit, you must file a legal answer with the court and appear in court to state your defense of the expiration of the statute of limitations. If you do not raise this defense, you will probably lose the lawsuit.

The statute of limitations for debts timeframe is different for each State.  For example, most debts are three years in North Carolina, but six years in Hawaii.  Depending on which state you live in the timeframe of the statute of limitations will vary.

Beware though, although you may believe the statute of limitations has run on a creditor’s ability to collect a debt, if there was activity on the card or if the creditor has filed a lawsuit, the statute of limitations may not have expired. Be careful assuming the statute of limitations has run on a debt – be sure to fully research your debts and when they were last used. You need to raise the defense of the expiration of the statute of limitations in your legal response to the lawsuit.

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At Duncan Law, LLP our goal is pretty simple. We try to make people's lives better. And in doing so we try to treat people the way we would want to be treated. It's just that simple.

We practice primarily in the areas of bankruptcy and workers' compensation. We have offices in Charlotte, Greensboro and Winston-Salem, NC.

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40 Responses to “What is the Statute of Limitations for Debts in North Carolina?”

  1. Matt says:

    This is a great tip, however; can someone please tell me what constitutes “activity” on a CC? Do payments count?

  2. Damon Duncan says:

    Matt,

    It’s a great question. That’s one of the major sources of litigation in this area. However, I believe payment on the credit card would constitute activity.

  3. Traci says:

    What type of agreement is a bank account? I think I have unpaid overdraft fees for a Wachovia bank account, but I’m not exactly sure and I would like to open another bank account. I would like to know if the statute of limitations ran out on the overdraft fees or not, so I would need to know what exactly does bank accounts fall under.

    Thanks!

  4. Damon Duncan says:

    Traci,

    Thanks for the question – it really depends on what state you are living in. If you are in North Carolina then it is most likely three years. As the article says though, you’ll need to be sure to speak with an attorney to determine if the statute of limitations has actually run or not because there are a lot of exceptions.

    Damon Duncan

  5. Name C. Lindsey says:

    My daughter enrolled for one day at ECU in 2004. She withdrew the next day to attend another school.
    She just received (2012) a letter from the NCO collection agency demanding $700.00 for tuition.
    ECU cannot provide any record of her attendance.
    Can the NCO legally send damaging information to the credit bureaus?
    Thank you

  6. Damon Duncan says:

    Thanks for leaving a comment. Technically, anyone can report something to a collection agency. However, you can dispute what they report. I would suggest asking the collection agency proof for what is owed. If they do report something you can dispute that, in writing, with the credit bureau(s). You may also want to contact the creditor and try to reach a settlement with them. If they continue to pursue it (and they have a legit ability to pursue it) then you may want to come back with a counter offer. I typically tell people don’t offer any more than 20%.

    Duncan Law Team

  7. Fred Worth says:

    Most of my debts that I owe are for amounts usually $20-$200 for hospital or physician fees. I have medicaid insurances that pays 80% and they bill me for the rest. I sometimes get over 5 bills all for different items in the same week for the same procedure at a hospital. I cannot pay the same and fall behind. Is the statue of limitations the same as three years as you mention above?

  8. Barbara Wilkerson says:

    The company I work for as an Office Manager for the past 2 and a half years sold an item worth about $2000. to a man which was under a contract for a finance company we work with. The date for the contract was 10/31/07. Yesterday the owner of the company I work for was in the same house selling the same item version 3. This man filled out an application. Does this constitue activity on the account?

  9. Damon Duncan says:

    Barbara,

    I’m not sure that I completely understand your question. Typically, negotiation of a debt extends the statute of limitations. However, it really depends on the specifics of your situation.

  10. Mimi M. says:

    The statue of Limitation “activity” does it apply to late fees & overdraft fees? My last payment was on October 20, 2009 in North Carolina. Could I use this method to hopefully get a dismissal for SOL? I got served with a Civil Summons by cer-mail December 30, 2012?

  11. Antonio L. says:

    Hi Damon,

    I moved to NC about 9 months ago. I am currently in the process of purchasing a new home and in doing so realized I had some bad debt from a previous marriage. Began trying to pay off that bad debt and succeeded till I got to my last and biggest creditor. Called them up, told them I wanted to negotiate, they asked what state I was in, and when I told them I was in NC, they told me that the statue of limitations had run out on the debt and they would not accept any money. Meanwhile it is still being reported on one of my bureaus and messing with my score. It has been more then 3 years but not more than 7. What do I do when they won’t take my money? Thanks for any help.

  12. William Gorman says:

    I just got notification that there had been a judgement against me in 2006. The proposed amount after compounded interest is $27,000. This is the first time that I became aware of any judgement. I moved, but still I thought they had a requirement to serve me or something of the sort prior to any hearing.

    The second issue is that I have two incomes, both of which are exempt from this action. The first being social security and the other my military retirement (w/disability adj). These are my sole sources of income.

    I had a period of alcohol abuse and gambling for which I have since sought treatment and recovered so I am not really sure whether the debt is legit or not.

    What do you recommend I do? If I offer them 20%, is that my starting point, or do I offer less and work up to that. The funds will have to be borrowed, but I now have reasonable credit and can make it happen.

  13. Damon Duncan says:

    William,

    Thanks for your question. A lot of times if a creditor has tried to serve you but they cannot find you to actually serve you with paperwork they will do what is called notice by publication. This means they will put a small notice in some small, almost never ready, newspaper letting you know have been served. The courts have said that after reasonable efforts to give actual notice this method is okay as a last resort.

    It sounds like your income may be protected from any creditors. I would just be very careful to show how each of those incomes are going into the bank. If it were me, I would look to have a separate bank account for each source of income.

    Be aware that if you settle the debts you will have to pay on taxes on any settled debt greater than $600. That means, if you owe $27,000 and they agree to accept $5,400 (20%) then you would have to pay taxes on the other $21,600 as gross income. That means you could end up owing the IRS another $4,000 to $5,000 in taxes. Making your total settlement upwards of $10,000. You may want to consider talking to a bankruptcy lawyer about possibly doing a Chapter 7 bankruptcy. These would likely wipe out the judgment that you have.

    This isn’t meant to be legal advice so be sure to talk with an attorney and set up a free consultation to learn how your situation can be specifically handled. Best of luck moving forward!

    Damon Duncan

  14. Pam says:

    I no longer work for the Postal Service, but the last 8 months I was employed there unable to work they continued to pay my health care. I am currently unemployed. The past few years they have tried to take our tax refund. My husband is disabled and gets Social Security. He’s had to file injured spouse claims to get his refund back. My question is how many years can they continue to do this so he will have to keep filing injured spouse claims to get his refund back. The debt is not his.

  15. Damon Duncan says:

    Pam,

    It’s tough to answer your question for sure. Was there an overpayment? I want to make sure I fully understand your question.

  16. justin says:

    Damon, i have a question, i recieved a civil summons on a vehicle i purchased in jan 2004 for 15712.83 i voluntarily returned the vehicle cause i was unable to afford it any longer after about 10 months. I have not heard anything from this bank in 9 years. Now some attorney is sending me a civil summons and saying i owe 20000.00 for the debt. Doesnt the statute of limitations apply here

  17. Damon Duncan says:

    Justin,

    Thanks for reaching out to us. The statute of limitations on debt collections is, unfortunately, always a gray area. Different types of communication with the creditor could prolong the statute of limitations. If you feel like the statute of limitations has run then I would suggest contacting the attorney who filed the complaint and ask them for evidence showing the statute of limitations has not already lapsed. Either way, respond to the civil summons with an answer to the complaint. In the answer explain that you believe the statute of limitations has run on this debt. Again, talking with the other attorney may give you better insight as to what their argument would be about the statute of limitations. Best of luck!

  18. Jonathan says:

    Name C. Lindsay – wow, there is some serious stuff going on at ECU. I just received a bill for $30 from 2002 for “student services.” Like your daughter I only attended ECU for a semester and have had NO contact with them before last month when they sent me this decade old bill. My question is, what recourse do I have if they report it to the credit bureau? I can afford the $30, but I am going to fall on my sword for this $30, I hope they are prepared to do the same.

  19. Damon Duncan says:

    You can always dispute the debts if you believe they are improper. You can do so by going to the following pages for each of the main credit bureaus: Equifax, Experian & TransUnion.

  20. ron says:

    I lost my second home in NC it was an 80-20 loan. The 2nd mortgage was sold to another company which is coming after me for the default on the promissory note. Where do the statue of limitations apply in NC where I closed on the property or Fl where I live?

  21. Damon Duncan says:

    Ron,

    The creditor can likely go after you in North Carolina. The fact that the loan was on a house in North Carolina probably gives them “minimum contacts” which is needed to have proper jurisdiction. They could also use the laws in Florida if that is where you live. They will probably chose the location that gives them the most flexibility.

  22. Vicki says:

    Ex spouse took out a loan from a hole in the wall lender 5 years ago under the husband’s name w/out his knowledge or consent. Four years after divorce, lender calls to claim. Husband is blindsided. How should he proceed? He has been advised not to respond and to get a credit report to see if there were other loans/transactions taken out in his name during the marriage that he was not privy to. The transaction was made over the computer w/out a handwritten signature.

  23. Damon Duncan says:

    Vicki,

    You have a two-fold question. The debt could be wiped out in a bankruptcy. However, it sounds like you are asking more about whether or not the Husband would be responsible since he wasn’t aware of debt. That’s a little more difficult to answer. If some kind of fraud could be shown then he would be able to go after the ex-wife. He may be able to argue that he isn’t responsible for the actual debt. However, I think that may be a difficult argument to be successful on.

  24. Vicki says:

    Thank you for your response. The wife filed bankruptcy at divorce, but the husband shouldered the debts she left behind…didn’t want the stigma of bankruptcy. She left quite a fingerprint behind for him to deal with. Again, there are things she has acquired without his knowledge through his information…only finding these things out years later. From this particular loan, it was well over 4 years ago according to the lender. Can he depend on the statute of limitations?

  25. Damon Duncan says:

    No problem. I would at least try to argue the statute of limitations. Send them a certified letter, return receipt requested, telling them the statute of limitations has passed and that continuing to try to collect on the debt violates the Fair Debt Collection Practices Act. They could always try to sue him at that point in time or they may just go away. It’s tough with the creditors – nobody knows for sure what direction they will head. Good luck!

  26. Sharon says:

    I was under a credit council nag co. When Wachovia bank wouldn’t work with me to make payments on a unsecured line of credit/checking. Since they would agree to any workable plan it went on in time till they procured collection so. Then in 2006 they sent me a summons to court. The attorney that worked through the counciling agency, told me she would handle the case pro Bon o. She didn’t tell they people (her boss) there that she was going to do the pro Bon o case. She had another court date the same day. I asked her wasn’t she suppose to call the court and get a mother date. She said I could call, so I did but some mix up with the clerks office not getting the message. So I went to court in case that did happen. I explained all this to the judge. She called the office of my attorney or the counciling agency not sure, but in any case,they(whoever) they talked to that she represisists me for the counciling not for this court appearance. So my attorney didn’t in form the counciling co of her verb able promise to repressistent me. so the judge asked was I comfortable going on anyway. I said not really. But it looked like I was lieing about having a attorney at all. So the judge gave wachoivas collection attorneys the case. With 8percent interest. So instead of being around 5000. Debit that they have already let run up from a couple thousand till now over 30,000. with a judgement on my home. Does statute of limitations apply here in nc.2006– till now ? Not mention the reporting to credit bureau agency’s. Help please. I have since all this lost my husband in 2011. I get his and my Ss. His retirement, and his va disability. That took over 18 months to get started. Remit asp. Sharon p.

  27. Damon Duncan says:

    Sharon,

    I’m sorry to hear about your situation. It certainly sounds like you are having a rough go of it. You should certainly contact a bankruptcy attorney in your area to at least explore your rights. When they filed the lawsuit and received the judgment that stops the statute of limitations. Now they have a lien against property. In North Carolina, that lien can last for ten years and then be renewed for an additional ten years (20 years total). You may be able to wipe out most, if not all. of the debt out through a bankruptcy. Good luck!

  28. Ernest says:

    Hello. If I have a debt with a physician’s practice, and I go to a different practice, in the same system, can the billing department for the system remove a payment made to one practice, and credit it to the other practice? That is, if I see Dr. A and owe him $25, and I go to Dr. B at a different practice, and pay $20, is it legal for the billing company to remove the payment from B and apply to A, without my consent?

  29. Damon Duncan says:

    Ernest,

    It will really depend on how the business is set up. If they aren’t the same business then they generally cannot go in and take your money. However, you will want to be careful and make sure you haven’t signed anything saying they can do that. I would call the billing department for the physician and just ask them the question – you don’t have to tell them who you are.

  30. JoAnn Saulnier says:

    I have an old debt that I am being taking to court for a judgement on Sept 8 which I will be out of state and need to reschedule. My last payment on the account was June 21, 2011. The account was charged off in Dec 2011. The amount is approximately 2600. I do not have a summons to appear in court but a request from the attorney to be put on the court calendar and to confirm a date. If the court date is beyond 3 years of the last payment, is this debt outside of the statues of limitation for a judgement against me? I was contacted by this law firm prior to June this year and was mailed a set of interrogatories and did not respond to. I did respond to a summons for an answer about the debt and had recorded this answer with the clerk of courts before this.. I nether denied or confirmed the debt but responded with seeking counsel. What are the time limits? Activity of charge off and additional interest charges were in Dec2011. Did they need to take me to court before June 2014 or Dec 2014? Is the attorney activity considered activity to keep the account within the statues of limitation because they contacted me and started legal action? Help please. I am running out of time.

  31. Shannon says:

    I had two mortgages. My house was foreclosed on in October of 2011. The first mortgage was paid off in the foreclosure. My second mortgage was sold to a debt collector. They are still trying to collect the amount from me. Is this outside the statute of limitations? I haven’t made a payment since early 2011.

  32. Nathalie says:

    Hello,
    I attended NCSU back in 2000-2001 and signed a promissory note for tuition, room, and board. I never took out loans for the fees, and during my college years I was poor and never made any payments. I have never made any payments actually and now the university has contacted me to pay them. I am currently a state employee and they have threatened to terminate my employment if I do not pay. Is this possible? Have the statute of limitations passed on this debt? Please help. Thanks!

  33. Damon Duncan says:

    JoAnn,

    I don’t have an answer that you’ll be happy with. Them filing a lawsuit against you stops the statute of limitations. Even if you didn’t answer it would have stopped the statute of limitations but the fact that you did respond just cements it even more. I would encourage you to try to work out some kind of payment plan with the creditor since it’s such a small amount. If you are able to come up with a lump sum amount you may be able to settle for 30-40% of what they are asking for. Good luck!

  34. Damon Duncan says:

    Shannon,

    It really depends on facts that weren’t provided. Have they sued you? If so, the statute of limitations is stopped. If you’ve been in communication with them in any way then the statute of limitations may have stopped. If you are confident that there has been no communication or efforts to make any payments in the last 3 years then you could always send them a seize and desist letter and tell them that the debt is outside the statute of limitations. You may want to consult an attorney depending upon the amount of the debt though.

  35. Damon Duncan says:

    Nathalie,

    It appears these would not be student loans based on your information. Therefore, they could possibly be wiped out if the statute of limitations has passed. For a promissory note the statute of limitations in North Carolina is for 5 years. You would need to make sure they haven’t sued you or anything like that. They should not be able to fire you for a debt that you have with them. I would contact them, in writing, and explain that you believe the statute of limitations has run on the debt and unless they can provide you evidence to the contrary they should stop contacting you or they will be violating the Fair Debt Collection Practices Act. Depending on the amount owed you may want to reach out to an attorney to represent you and be able to provide you more specifics for your case. Thanks!

  36. Concerned says:

    My co-leasee defaulted on our joint business suite lease. At the time of lease inception, the creditor required a personal guarantee from both of us. I submitted mine and he stated he did too. The leasing company issued the lease and we moved into the conjoined suite.

    Long story short, he defaulted on the lease. Unable to carry the lease alone, it provoked a default. They came after me for the default – since he either lied about submitting the personal guarantee or they issued the lease without reflecting it.

    They obtained a judgement against me and put a lien on my home. I settled with them for $10,000.00 versus the $37,500.00 judgement. The home was in transition and I had to free the title.

    Will I really owe taxes on the difference as you stated in a previous comment? Secondly, how best should I go about suing him to get my $10,000.00 back?

  37. Jeannie Ruffin says:

    Advanced Medical Support sent diabetid supplies to me from 2009-August2012. They sent 3 month supplies and assured me I had no co-pay even when my EOB from my medicare EOB said I owed a co-pay because I was going to cancel after the first shipment. Now after all these years and shipments and not one bill or call for payment, I have been contacted by a collection agency for almost$700 on 9-13-2014. I was shocked and refused to acknowledge the debt. I referred my sister-in-law to these same people and they never sent her a bill and want over$800. I

  38. John Smith says:

    One of our parents died in November 2009. She was divorced from her husband in 1990, and never remarried. Her will designated one of the adult children as executor, who filed the will with the county clerk shortly after her death.

    In the will, the house was left to three adult children. Two of the three children lived in the house taking care of the parent before her death and continue to live there and pay the monthly mortgage payments. The mortgage company has tried to get us to refinance the mortgage, but we have declined their offers – which makes us think that their paperwork must not be all that “clean”.

    Deceased parent also left credit card debts.

    Due to some family conflicts, parent (who was cremated) has not yet been buried in an out-of state family plot, which has held up the settlement of the rest of the estate. We have been getting phone calls and letters from various creditors.

    Executor just got notice that a summons is being served on her shortly before the 5th anniversary of the debtor’s death. There is no record of any matters filed in our county clerk’s office, which makes us think this is being filed in an out of state court.

    Our question is about the statute of limitations when a debtor dies. Is there no statute of limitations, or is the SOL merely put on hold until an executor is appointed? Since the debtor designated an executor, does the SOL start running again once the clerk of court officially recognize the estate executor?

  39. Robert Horan says:

    In May 2010 my wife lost her job in Washington, NC. There were no jobs available in NC for a psych RN, so she accepted a job offer in Texas. We had to break our 1 year lease on our apartment after 10 months. It was a choice – either break the lease and go to Texas for a new job, of get evicted for non-pay. The Apartments have sold the collection to a collection agency and it is still on our credit reports. Can we get the Credit Report Agencies to delete this as it is over 3 years old, it’s affecting our ability to lease a house.

  40. Robert Davis says:

    I just have one question. I live in NC and had a car repossessed back in 2004. I have not heard anything about in the passed 9 years. I never made a payment or sent them a letter. The passed 2 week all I have were threatening phone calls that they were going to come to my work and summons me. I got a call from my ex stating that someone showed up at her house looking for me to summons me. I have not lived there in 10 years. Do they have the right to do that or come to my work? I would think that the statute of limitations is up? Can I tell they to take a hike? What are my options? Thanks for your help

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