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

Aug 03, 2011 19 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to successfully collect the debt or file a lawsuit before expiration of the statute of limitations, then the debt is no longer applicable for collection by a lawsuit against you.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, PLLC 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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19 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.

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