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In Georgia, the statute of limitations determines how long creditors can legally enforce debt collection through lawsuits. Here's what you need to know:
Once the statute expires, the debt becomes time-barred, meaning it cannot be enforced in court. However, actions like partial payments or written acknowledgments can reset the clock, restarting the statute period.
Debt collectors must comply with strict rules under the Fair Debt Collection Practices Act (FDCPA). They cannot sue or threaten legal action on expired debts, but they can still contact debtors informally. Violating these rules can lead to penalties.
Understanding these timelines is essential for debt buyers, sellers, and collectors to assess legal risks and enforceability. Proper documentation and verification of debt status are key to avoiding legal pitfalls.
Georgia Debt Collection Statute of Limitations: Time Limits and Key Rules
Georgia law categorizes debt into different types, each with its own timeframe for legal enforcement. Depending on how the debt is documented, creditors have either 4 years or 6 years to file a lawsuit. These distinctions are crucial for anyone involved in debt portfolio trading, as they directly affect both the legal enforceability and the value of the debt. Below, we break down the time limits for written and oral debts.
In Georgia, written contracts come with a 6-year statute of limitations. As outlined in O.C.G.A. § 9-3-24, creditors have 6 years from the date the debt becomes due to initiate legal action on simple written agreements. This includes:
The Georgia Code specifies:
"All actions upon simple contracts in writing shall be brought within six years after the same become due and payable."
– Georgia Code § 9-3-24
Medical debts also fall under this 6-year limit if a signed financial responsibility form is in place. Credit card debt, though once debated, is now treated as a written contract. For instance, the case Hill v. American Express confirmed that credit card agreements with written terms fall under the 6-year statute. The Georgia Department of Law supports this, noting that "the statute of limitations on credit card debt is generally six years."
Oral agreements and open accounts have a shorter enforcement window - 4 years. Under O.C.G.A. § 9-3-25 and § 9-3-26, this applies to:
The Georgia Code states:
"All actions upon open account, or for the breach of any contract not under the hand of the party sought to be charged... shall be brought within four years."
– Georgia Code § 9-3-25
This distinction between written and oral agreements has significant implications in debt trading. For example, a $50,000 debt portfolio that is 5 years old could retain substantial value if backed by written contracts. However, the same portfolio might be nearly worthless if it relies on verbal agreements, as these would fall outside the 4-year limit. Similarly, medical providers may find that recurring charges like co-pays, without signed agreements, are treated as open accounts with the shorter timeframe, while signed paperwork extends the enforceability to the full 6 years.
Knowing when the statute of limitations begins - and what actions can restart it - is crucial for anyone involved in trading debt portfolios. A single event can breathe new life into an expired debt, giving it a fresh enforcement window. Let’s break down how the clock starts and what can reset it.
The statute of limitations generally starts ticking from the first missed payment. For written contracts, the clock begins when the debt becomes "due and payable" according to the terms of the agreement. For credit cards and other open accounts, it starts either from the last payment or the last time the card was used.
It’s important to note that a charge-off does not reset or impact the statute of limitations. The timeline continues to run from the original default date. To confirm this date, credit reports are often a reliable source. As Jill Sandt, Attorney at Sandt Law LLC, explains:
"The statute of limitations starts on the date you first became behind on payments and never caught up. You can often find this date by looking on your credit reports for the 'Date of First Delinquency.'"
Certain events can temporarily pause the clock. For example, if a debtor moves out of Georgia, the statute is paused until they return. Similarly, bankruptcy proceedings impose an automatic stay that halts the timeline. In cases involving fraud or concealment, the clock doesn’t start until the fraud is uncovered.
Now, let’s look at specific actions that can reset the clock entirely.
Certain actions can reset the statute of limitations back to zero, no matter how much time has already passed. The Georgia Attorney General's Consumer Protection Division explains:
"When the clock restarts, it restarts at zero, no matter how much time had elapsed before the activity."
The most common triggers for restarting the clock include:
Georgia law specifically requires a written acknowledgment for time-barred debts. According to the Consumer Ed division of the Georgia Department of Law:
"Georgia law... provides a statutory written requirement whereby you as the debtor... would have to provide a written acknowledgement sufficiently recognizing the debt in order for a creditor to collect on a debt that would otherwise be time-barred."
This means that for debts already past their statute of limitations, only a written acknowledgment can revive the creditor’s right to sue - verbal promises won’t cut it.
| Action Type | Impact on Statute | Example |
|---|---|---|
| Partial Payment | Restarts clock to zero | Paying toward a 5-year-old balance |
| Written Acknowledgment | Restarts clock to zero | Signing a letter admitting the debt is yours |
| New Charge | Restarts clock to zero | Using a store card after years of inactivity |
| New Promise to Pay | Restarts clock to zero | Agreeing to a payment plan in writing |
On the other hand, certain events, like moving out of state or filing for bankruptcy, only pause the clock rather than resetting it.
For those trading debt portfolios, these reset mechanisms can significantly impact the portfolio's value. For instance, a $100,000 portfolio of 5-year-old debts under a 6-year statute might seem close to expiration. However, if debtors have made small payments in the past year, those accounts gain fresh 6-year enforcement windows, boosting both their value and enforceability.
Even after a statute of limitations has expired, a debt remains on record but cannot be enforced through the court system. Knowing the legal boundaries for managing these debts is crucial for anyone involved in debt collection or purchasing in Georgia.
Debt collectors can still contact individuals about expired debts via phone or written communication, but they are prohibited from using the courts to enforce payment. Filing a lawsuit on a time-barred debt is a direct violation of the Fair Debt Collection Practices Act (FDCPA). As Daniel Cohen states:
"Collection agents violate the FDCPA if they file a lawsuit on an expired debt."
Collectors are also forbidden from threatening legal actions, such as wage garnishment, property liens, or lawsuits, for debts that are no longer enforceable. While the debt itself still exists, it cannot be pursued legally. The Consumer Ed division of the Georgia Governor's Office of Consumer Protection emphasizes:
"While you may have a 'moral obligation' to pay a debt that you legitimately owe, you do not have a legal obligation to pay it."
Debtors should still respond to lawsuits, even for expired debts, to avoid a default judgment. The Georgia Department of Law warns:
"If you are sued and you do not answer the lawsuit, the debt collector will be able to get a judgment against you – even though, had you gone into court and asserted that the debt was too old, the case would have been thrown out."
Here’s a quick breakdown of what actions collectors can and cannot take:
| Action Type | Allowed Actions | Legal Consequence of Violation |
|---|---|---|
| Phone Calls/Letters | Yes (if non-threatening) | N/A |
| Filing a Lawsuit | No | FDCPA/FBPA Violation; Lawsuit Dismissal |
| Threatening Garnishment | No | FDCPA Violation; Statutory Damages |
| Reporting to Credit Bureaus | Yes (up to 7 years) | N/A |
These restrictions underscore the importance of adhering to FDCPA rules when dealing with expired debts.
The FDCPA and Georgia’s Fair Business Practices Act (FBPA) impose strict rules on debt collection activities. Under Georgia law, any violation of the FDCPA is automatically considered a violation of state law, exposing collectors to both federal and state penalties.
Collectors are required to send a written validation notice within five days of their first contact with a debtor. This notice must include the amount owed and details about the original creditor. If the debtor disputes the debt in writing within 30 days, the collector must stop all collection efforts until they provide written verification.
Misrepresenting the legal status of a debt is strictly prohibited. Collectors cannot falsely claim they have the right to sue on expired debts or use deceptive tactics to pressure repayment. Georgia enforces these rules rigorously, ranking as the second-highest state in the U.S. for complaints filed with the Federal Trade Commission about debt collection practices.
For intentional violations of the Georgia FBPA, collectors may be required to pay three times the actual damages, along with reasonable attorney's fees and court costs. These legal standards are essential for debt buyers to assess both the value of their portfolios and the potential legal risks involved.
Navigating the complexities of debt portfolio trading requires careful attention to legal risks, particularly when it comes to verifying statute deadlines. Debexpert's platform offers tools to help both buyers and sellers manage these challenges effectively.
One of the first steps in managing risk is determining whether the accounts in a portfolio fall within the legal time limits for enforcement. Written contracts typically have a 6-year statute of limitations, while oral agreements and open accounts are limited to 4 years. Debexpert’s portfolio analytics tools allow buyers to cross-reference account data with these legal timelines, ensuring accurate assessments.
The debt’s start date - often marked by the last payment or the initial delinquency - is critical in this process. Debexpert’s tools can flag accounts where the statute of limitations has already expired, making them legally unenforceable. Since portfolios often contain a mix of enforceable and time-barred accounts, this verification step is essential before proceeding with any trade.
For credit card debt, the classification of an account as an "open account" (4 years) or a "written contract" (6 years) can vary depending on court rulings. Additionally, accounts tied to existing court judgments require separate consideration, as these judgments remain enforceable for 7 years. Buyers should also refer to earlier sections for details on events that can reset the statute of limitations clock.
Once verification is complete, the next focus is understanding how these timelines influence the portfolio’s value.
Debt that has passed its statute of limitations loses much of its value because it cannot be enforced in court. While collectors can still attempt informal recovery methods, the lack of legal enforcement options - like wage garnishment - significantly reduces recovery potential. Despite this, the expired debt industry still generates over $1 billion in annual revenue, underscoring the importance of accurate pricing.
To avoid overpaying for unenforceable accounts, buyers should ensure all records clearly verify the statute start date and any events that may have reset it. Debexpert’s platform analytics can help identify last payment dates and highlight accounts that are nearing the 4- or 6-year limits. This level of scrutiny is essential to prevent acquiring portfolios with inflated valuations based on accounts that are no longer legally collectible.
Effective debt acquisition relies heavily on thorough preparation and attention to detail from both sellers and buyers. Understanding the legal timelines and reset mechanisms is just the starting point - rigorous due diligence is what ensures success.
Accurate documentation plays a key role in proving a portfolio's enforceability. Sellers must provide the Date of Last Activity (DLA) for every account and include original signed contracts to substantiate the 6-year statute of limitations. It's equally important to clearly identify any time-barred accounts and document reset events.
When asserting the 6-year limitation, the original signed contract is essential. Without it, the debt could be classified under a shorter timeframe, potentially reducing its value. Sellers should also clearly label debts that are no longer enforceable in court due to the statute of limitations. While these accounts can still be pursued through informal collection efforts, their legal enforceability is null.
Reset events - like partial payments, written acknowledgments, or new promises to pay - must be documented meticulously. These events can restart the clock on the statute of limitations, which helps buyers determine which accounts remain actionable .
Buyers must carefully examine the documentation provided by sellers to ensure the accounts they purchase remain actionable. Prioritize accounts that fall within the 4- to 6-year enforcement window, as these provide the best opportunity for legal recourse. Additionally, verify the debt classification and check for any reset indicators. This is especially important for credit card debt, which may sometimes be classified as "open accounts" with a shorter 4-year limitation.
To confirm enforceability, review payment histories to identify the last actionable event, such as the last payment date or the date the account became delinquent. These dates typically mark the beginning of the statute of limitations . For portfolios that include judgments, ensure those judgments were issued within the past 7 years, as Georgia judgments become dormant after this period unless renewed .
"If you are sued and you do not answer the lawsuit, the debt collector will be able to get a judgment against you – even though, had you gone into court and asserted that the debt was too old, the case would have been thrown out." - Consumer Ed, Georgia Department of Law
Before finalizing a purchase, confirm the seller can provide key information, including the amount of debt, the name of the original creditor, and the date the debt was incurred, as required by the Fair Debt Collection Practices Act (FDCPA) . For consumer loans of $3,000 or less, verify that the original lender was licensed under the Georgia Installment Loan Act. Loans from unlicensed lenders may be deemed null and void.
Knowing Georgia's statute of limitations is crucial for effective debt collection and portfolio trading. The enforcement period - 6 years for written contracts and 4 years for oral agreements - determines whether a debt can be legally pursued. Time-barred debt, while still recorded, loses enforceability in court, significantly reducing its market value as collectors can no longer seek lawsuits, judgments, or wage garnishments.
These legal limits influence both collection tactics and the valuation of debt portfolios. The financial impact is immense, with the "zombie debt" market generating over $1 billion annually. However, attempting to sue on time-barred debt violates both the Fair Debt Collection Practices Act and Georgia's Fair Business Practices Act, exposing violators to serious legal consequences. As Ellis Page from Recuvery explains:
"The statute of limitations on debt in Georgia is more significant than a legal technicality. It directly affects your business's cash flow, recovery strategy, and compliance exposure".
For debt traders using platforms like Debexpert, thorough verification is non-negotiable. Before finalizing a transaction, it's critical to confirm the date of the last payment or delinquency, review original documentation to classify the debt properly, and check for any events that may have reset the statute of limitations. These steps safeguard both buyers and sellers from legal risks and ensure portfolios are accurately valued based on enforceability.
Even time-barred debts can sometimes lead to default judgments if left uncontested, underscoring the importance of precise records. Verifying payment histories and documented acknowledgments is key to minimizing risks and maintaining effective trading practices. By mastering these timelines, businesses can align with compliance requirements and enhance portfolio performance.
To figure out the “date of first delinquency” for your debt in Georgia, take a close look at your credit reports or account statements. You’re looking for the date you first missed a payment and didn’t bring the account current. This date usually marks the start of the statute of limitations.
Keep in mind, certain actions - like making a partial payment or acknowledging the debt in writing - can reset or extend this timeline. That’s why it’s crucial to carefully review all account activity before taking any steps.
In Georgia, if you make a small payment or provide a written acknowledgment of a debt, it can reset the statute of limitations. This is treated as a renewed promise to pay, effectively extending the period during which legal action may be pursued to collect the debt.
If you’re facing a debt lawsuit in Georgia and believe the debt is past the statute of limitations, you can use this as a legal defense in court. Doing so could result in the case being dismissed. To navigate this process effectively and safeguard your rights, it’s highly advisable to consult a lawyer who can provide proper guidance and help present your defense accurately.
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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