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When it comes to debt collection in Arizona, the statute of limitations is a key legal safeguard. Here's what you need to know:
Understanding these timelines is critical for both creditors and debtors to navigate the legal landscape effectively.
Arizona Debt Collection Statute of Limitations by Debt Type
Arizona law categorizes debts based on their specific limitation periods, which is crucial for managing financial risk and ensuring compliance with legal requirements.
In Arizona, the statute of limitations for credit cards, auto loans, and written medical bills is six years, as outlined in A.R.S. § 12-548. This means creditors have six years from the date of the first missed payment to file a lawsuit.
For credit card debt, Arizona law explicitly states:
"An action for debt shall be commenced and prosecuted within six years after the cause of action accrues, and not afterward, if the indebtedness is evidenced by... A credit card."
Unlike some states that classify credit cards as open accounts with shorter timeframes, Arizona provides a longer, more defined window. This approach benefits creditors and debt buyers by offering clarity when assessing portfolio risks. Similarly, written medical bills and auto loans, when backed by written contracts, also fall under the six-year limitation.
Debts tied to written contracts or promissory notes are governed by A.R.S. § 12-548 and A.R.S. § 47-3118. This includes personal loans, installment agreements, and any debt documented through a signed written agreement executed in the state.
Promissory notes have unique rules. For notes with a specific due date, the six-year period begins on the due date or the accelerated due date. For demand notes, the statute allows up to 10 years without payment or demand before the action is barred, provided no principal or interest payments are made during that time.
Arizona law also addresses jurisdictional conflicts. According to A.R.S. § 12-548(B), if another state's statute of limitations differs for written contracts or credit cards, Arizona's six-year limit prevails.
These provisions emphasize the importance of carefully evaluating risks tied to written agreements.
For debts not bound by written contracts - such as oral agreements and open accounts - Arizona enforces a three-year limitation under A.R.S. § 12-543. This includes a rolling rule where any recent activity on the account resets the three-year clock.
The statute specifies:
"There shall be commenced and prosecuted within three years after the cause of action accrues... For debt where the indebtedness is not evidenced by a contract in writing [or] Upon stated or open accounts."
This means creditors can pursue older debts if there has been activity, such as a new charge, within three years of filing.
| Debt Type | Statute of Limitations | Legal Authority |
|---|---|---|
| Credit Cards | 6 Years | A.R.S. § 12-548 |
| Medical Bills (Written) | 6 Years | A.R.S. § 12-548 |
| Auto Loans | 6 Years | A.R.S. § 12-548 |
| Written Contracts | 6 Years | A.R.S. § 12-548 |
| Promissory Notes | 6 Years | A.R.S. § 47-3118 |
| Oral Agreements | 3 Years | A.R.S. § 12-543 |
| Open Accounts | 3 Years | A.R.S. § 12-543 |
Understanding these timeframes is essential for determining when the statute begins and how specific actions can reset the limitation period. Up next, we'll explore the mechanics of how these timelines are initiated and adjusted.
The statute of limitations kicks off when the "cause of action accrues", which is essentially the date of the first breach or missed payment. For credit card debt, the Arizona Supreme Court clarified this in the 2018 case Mertola, LLC v. Santos (422 P.3d 1028). According to the ruling, the six-year clock begins ticking when a debtor first fails to make a full, agreed-upon minimum monthly payment. This means the countdown starts with that initial missed payment - not when the account is charged off or accelerated.
For written contracts, the six-year period begins with the first missed payment. If you're dealing with promissory notes that have a specific due date, the clock starts on that date - or on the accelerated due date if the note has been accelerated. With demand notes, the six-year period starts when the creditor formally demands payment. However, if no demand is made and neither principal nor interest is paid for 10 consecutive years, creditors lose the right to take legal action.
Open accounts, on the other hand, have a three-year statute of limitations. This period is measured from the date of the last charge made on the account. Importantly, any new charge resets this three-year period.
Now, let’s look at how certain actions by debtors - like making payments or acknowledging the debt - can impact these timelines.
Once the statute of limitations begins, specific actions can reset the countdown. For credit card debt, only a full payment that brings the account current will restart the clock. The Arizona Supreme Court, in Mertola, LLC v. Santos, made it clear that partial payments do not reset the statute.
For other types of debt - such as written contracts, oral agreements, and promissory notes - a written acknowledgment of the debt or any payment toward the balance can restart the limitations period. Even a small payment or acknowledgment could give creditors a fresh six-year window to take legal action.
Additionally, the statute of limitations can be paused, or "tolled", under certain circumstances. For instance, if a debtor leaves Arizona, the clock stops running during their absence. It resumes only when the debtor returns to Arizona or can be served within the state’s jurisdiction.
In Arizona, once the statute of limitations expires, creditors lose the right to file a lawsuit for debt collection. For credit cards and written contracts, this period is six years, starting from the first missed minimum payment. After this, legal action is no longer an option.
"If creditors do not file within this timeframe, they permanently lose the right to sue, protecting consumers from ongoing legal risks over old debts." – Arizona Consumer Law
While creditors can still attempt to collect time-barred debts through methods like phone calls or letters, they cannot threaten or pursue legal action. Any suggestion of a lawsuit on expired debt violates both the Fair Debt Collection Practices Act (FDCPA) and Arizona's consumer protection laws, which are designed to safeguard residents from unfair practices.
Managing time-barred debts requires a strict focus on compliance. Creditors should carefully review payment records to pinpoint the date of the first missed minimum payment, which starts the six-year statute of limitations. Avoid relying on charge-off dates or assumptions about when the clock began.
Clear and honest communication is key. Creditors should stop making litigation threats on time-barred debts and confirm that no legal action was initiated during the six-year period before writing off the debt. In Arizona, partial payments do not reset the statute of limitations. Only payments that bring the entire account current can restart the clock. This detail is critical for portfolio managers when evaluating older accounts and factoring them into valuation models.
Adhering to these practices is especially important when considering debt trading strategies in Arizona.
In Arizona, the value of debt portfolios hinges on their enforceability. Debts that fall within the enforceable period hold greater market value, while those that are time-barred see their recovery potential plummet.
The 2018 Mertola, LLC v. Santos decision clarified that the six-year statute of limitations for credit card debt begins with the first missed payment. This means debt buyers must focus on the date of the first missed minimum payment - not the charge-off date - to accurately determine how much legal life remains for the debt.
"The statute of limitations begins to run when the debtor first fails to make a full, agreed‐upon minimum monthly payment." – Arizona Supreme Court, Mertola, LLC v. Santos
It’s important to note that only full payments that cure the default can reset the statute of limitations. Additionally, the type of debt matters: oral agreements and open accounts have a three-year limitation, while written contracts, including credit card agreements, have a six-year period. Because of these differences, buyers should carefully segment open accounts from written contracts during their due diligence to properly assess risk.
These evaluations provide a foundation for using advanced tools in debt trading.
Debexpert offers tools designed to help debt buyers navigate risks tied to the statute of limitations. Its platform provides detailed portfolio analytics and secure file-sharing features, enabling buyers to assess enforceability before placing bids. For example, buyers can use the platform to verify payment histories and determine whether a full payment has reset the statute of limitations.
Debexpert also supports real-time communication, allowing buyers to request critical documents, such as proof of debtor relocation that might trigger tolling provisions. Under Arizona law, the statute of limitations is paused if the debtor is out of state or lacks a known, reachable residence. With secure file-sharing capabilities and in-depth analytics, Debexpert ensures that due diligence focuses on debts that remain enforceable within the statutory timeframe.
Understanding Arizona’s statute of limitations is essential for debt buyers and creditors looking to stay compliant while optimizing portfolio value. In Arizona, the six-year limitation for enforcing credit card debt and written contracts starts ticking after the first missed minimum payment. Once this period expires, the debt becomes time-barred, making lawsuits unlikely to succeed and potentially exposing creditors to risks under the Fair Debt Collection Practices Act.
The pivotal case, Mertola, LLC v. Santos, clarified that only a payment bringing the account fully current resets the six-year statute - partial payments do not restart the clock. This decision highlights the need for detailed payment history reviews to accurately assess risk and determine portfolio value.
For those involved in debt trading, the ability to separate enforceable debt from expired debt is critical. Debts still within the enforceable period are typically more valuable, meaning efforts should be concentrated on accounts that remain within the statutory window. This approach not only ensures compliance but also supports smarter portfolio management and better recovery outcomes.
Arizona law (ARS § 12-548) provides consistency by applying the six-year rule across multi-state portfolios. Additionally, tolling provisions, which pause the statute when a debtor leaves the state, add another layer of complexity to portfolio evaluations. Together, these legal factors play a key role in shaping effective debt trading strategies in Arizona.
To figure out the date of your first missed payment, check your account or billing statements for the last payment - whether full or partial - that was made before the account went delinquent. If you’re unable to locate this information, reach out to your creditor or billing department for assistance. This date is crucial, as it often marks the beginning of the statute of limitations for debt collection under Arizona law.
In Arizona, a debt collector can still report or sell a debt even after it becomes time-barred. This means the debt is still considered valid. However, they are not allowed to file a lawsuit to collect the debt once the statute of limitations has passed. While the debt exists, legal action to enforce it is no longer an option after the time limit expires.
If you're facing a lawsuit in Arizona over a debt you suspect is too old to collect, you can use the statute of limitations as a defense. In Arizona, the statute of limitations for most written contracts, such as credit card debt or medical bills, is six years. It's important to carefully review the specifics of your case and consult with an attorney to confirm whether the debt falls outside this time frame and to understand how to present this defense effectively in court.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
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