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In Massachusetts, the statute of limitations for collecting unpaid debts depends on the type of debt and when it originated. Here’s what you need to know:
Understanding these timeframes is critical to avoid legal risks and ensure compliance with Massachusetts debt collection laws.
Massachusetts Debt Collection Statute of Limitations by Debt Type
Knowing the specific time limits for collecting different types of debt in Massachusetts is essential for managing portfolio risk and ensuring compliance. Massachusetts law outlines distinct timeframes for various debt categories, with most consumer debts - like credit card balances, medical bills, and general contracts - falling under a six-year statute of limitations as defined in MGL c. 260, § 2. However, some debts have longer enforcement periods.
Credit card debt is subject to a six-year statute of limitations under MGL c. 260, § 2. This period begins with the first missed payment. Once six years pass without any payments or acknowledgment of the debt, creditors lose their ability to file lawsuits, obtain judgments, or garnish wages. However, they can still attempt to collect voluntarily through phone calls or letters. It’s important to note that even a small payment can restart the six-year clock.
Medical debt is treated as a type of contract debt and shares the same six-year statute of limitations. This applies to obligations like hospital bills, physician charges, and lab fees. The limitation period starts on the date of the first unpaid bill or, if no payment arrangement exists, from the date the services were provided.
Written and oral contracts, such as personal loans and service agreements, are also governed by a six-year statute of limitations under MGL c. 260, § 2. However, certain exceptions exist. Contracts explicitly marked as "under seal" and promissory notes signed in the presence of a witness have a longer enforcement period of 20 years when pursued by the original payee. Additionally, debts related to the sale of goods under the Uniform Commercial Code (UCC) have a shorter four-year limitation under MGL c. 106, § 2‑725. These variations highlight the differences in enforcement timelines for contract-related debts.
Once a creditor secures a court judgment, the enforcement window extends to 20 years under MGL c. 260, § 20. After this period, the debt is considered legally satisfied. During the 20 years, creditors can enforce judgments through wage garnishments, property liens, or bank levies. Massachusetts law allows garnishment of the lesser of 25% of disposable income or the amount exceeding 50 times the federal or state minimum hourly wage. Additionally, judgments accrue interest at a rate of up to 12%, making them more valuable compared to consumer debts that have become time-barred.
The table below provides a summary of the statutory periods for different types of debt.
| Debt Type | Statute of Limitations | Legal Authority |
|---|---|---|
| Credit Card / Consumer Debt | 6 Years | MGL c. 260, § 2 |
| Medical Debt | 6 Years | MGL c. 260, § 2 |
| Oral & Written Contracts | 6 Years | MGL c. 260, § 2 |
| Contracts Under Seal | 20 Years | MGL c. 260, § 1 |
| Witnessed Promissory Notes | 20 Years | MGL c. 260, § 1 |
| UCC (Sale of Goods) | 4 Years | MGL c. 106, § 2‑725 |
| Court Judgments | 20 Years | MGL c. 260, § 20 |
The statute of limitations begins ticking from the date of the first breach of contract - essentially, the first missed payment that is never later resolved . For instance, if someone makes their last credit card payment in January but misses the February payment, the clock starts from that missed February payment. For revolving credit card debt, this clock typically starts when the account first becomes delinquent due to a missed payment. The same six-year timeframe applies to medical debt as well.
Knowing when the clock starts is key to understanding how certain actions might reset this period.
Certain actions can reset the statute of limitations, giving creditors a new six- or twenty-year window to file a lawsuit. As LegalClarity Massachusetts explains:
"Even a small, token payment can be legally interpreted as an admission of the debt, causing the entire limitations period to begin anew from the date of that payment"
- LegalClarity Massachusetts
Other actions that can restart the clock include acknowledging the debt in writing, agreeing to a new payment plan or settlement, or signing a new agreement or promissory note. In Massachusetts, regulations require collectors to inform consumers if a debt is no longer enforceable due to its age and to warn that making a payment could restart the limitations period.
In Massachusetts, attempting to collect on time-barred debt comes with serious legal consequences. According to 940 CMR 7.07, pursuing expired debt without providing the required disclosures violates the Massachusetts Consumer Protection Act (MGL c. 93A). The Debt Collection Fairness Act goes even further, explicitly barring creditors, debt buyers, and collectors from filing lawsuits or initiating arbitration on time-barred debts. The law clearly states:
"No creditor, debt buyer, or debt collector shall bring a suit or initiate an arbitration or other legal proceeding to collect a consumer debt if the applicable limitations period... has expired."
- Massachusetts General Laws Chapter 93L, Section 3(c)
This means that filing lawsuits or starting arbitration for time-barred debt is completely off-limits. Debt buyers must carefully monitor accounts to ensure they don’t attempt to collect on debts that exceed the four- or six-year statute of limitations.
The legal restrictions surrounding time-barred debt have a direct impact on its value in a debt portfolio. Once a debt becomes time-barred, its worth drops significantly. Without the ability to sue, garnish wages, or place liens, recovery efforts rely entirely on voluntary payments, which are far less predictable.
Debt portfolios with court judgments, however, retain more value. Judgments allow for a 10-year collection window, which can be renewed once for an additional 10 years, compared to the standard four-year statute for new consumer debt. That said, judgment interest for consumer debts is capped at 2% per year, which can limit returns over time.
Starting January 1, 2024, payments made on debts after the four-year statute of limitations has expired will no longer reset the clock. The law is explicit:
"A payment on a consumer debt after the limitations period... has run shall not revive or extend the limitations period or bar the consumer from asserting a defense."
- Massachusetts General Laws Chapter 93L, Section 3(b)
This provision further reduces the potential value of time-barred debts for buyers.
Given the legal risks and diminished portfolio value, compliance is critical for debt buyers operating in Massachusetts. State law requires specific disclosures in all written and oral communications, along with a validation notice sent within five business days of initial contact. The disclosure must appear prominently in at least eight-point type on the front page of written communications, using the exact wording provided by the Massachusetts Attorney General. This disclosure informs debtors that their debt may be too old for legal action and, for debts not covered by the 2024 Act, warns that making a payment could restart the statute of limitations.
The validation notice must include key details such as the amount of the debt, the name of the creditor, and the debtor's rights to dispute the debt. If a debtor disputes the debt in writing within 30 days, all collection efforts must stop until proper verification is provided. Additionally, collectors must limit contact to no more than two communications per seven-day period for each debt, as required under 940 CMR 7.04.
Strict compliance with these rules is not optional - it’s essential to avoid legal penalties and maintain credibility in the debt-buying industry.
Debt buyers in Massachusetts should categorize their portfolios into three groups: debts within the six-year statute of limitations, time-barred debts, and those eligible for a 20-year window (such as witnessed promissory notes or contracts under seal).
To determine when the six-year clock begins, confirm the breach date - this is the first missed payment that remains unresolved. It’s also essential to audit portfolios for any "re-aged" accounts, where actions like a payment, written acknowledgment, or a new payment plan might have restarted the limitations period. However, under the Debt Collection Fairness Act, payments made after the statute of limitations has expired no longer reset the clock.
Operational costs for mandatory disclosures, as well as ensuring documentation meets validation requirements under 940 CMR 7.08, should also be factored into valuations. Portfolios missing critical documents, such as a payment ledger or the original signed contract, often carry lower recovery potential. This is because if a debtor disputes the debt and the necessary documentation isn’t available, collection efforts must stop.
Accurate valuation is the foundation for successful acquisitions and risk management in Massachusetts. These practices also set the stage for leveraging tools like Debexpert for detailed portfolio analysis.
Debexpert offers a streamlined approach to portfolio evaluation, helping debt buyers assess debt age, documentation quality, and enforceability. The platform’s analytics feature makes it easier to determine if accounts fall within the enforceable six-year window or if they qualify for the extended 20-year period in cases involving contracts under seal.
The secure file-sharing capabilities, equipped with end-to-end encryption, allow buyers to access and review essential documents like payment ledgers and original contracts - key for meeting validation requirements under 940 CMR 7.08. Real-time communication features further simplify inquiries about breach dates, prior collection attempts, and actions that may have reset the statute of limitations.
For those managing multiple portfolios, Debexpert’s notification system can highlight opportunities that align with compliance strategies. By setting preferences for specific timeframes or debt categories, buyers can focus on portfolios with higher recovery potential while reducing the risks associated with time-barred debts.
Strong internal policies are crucial for minimizing legal risks tied to time-barred debts. For instance, ensure all communications about debts older than six years include the Massachusetts Attorney General–mandated notice. Staff should be trained on the exact wording and formatting to meet these requirements.
A call tracking system is another essential tool to stay compliant with the state’s limit of two creditor-initiated communications per seven-day period for each debt. Automated systems can help avoid violations that might be classified as harassment by the Attorney General. Additionally, internal processes should be updated to ensure that payments made after the statute of limitations has expired do not mistakenly reset the legal collection clock, as such payments no longer revive the statute under the Debt Collection Fairness Act.
Finally, implement a judgment verification process before pursuing collections on consumer debt judgments. Confirm that judgments are within the 10-year enforcement window and verify whether a one-time renewal has already been exercised. For passive debt buyers - those who purchase debt for investment and hire licensed third-party collectors - Massachusetts law may not require a separate collection license, potentially reducing overhead and operational complexity.
Massachusetts has recently updated its debt collection laws with the introduction of the Debt Collection Fairness Act (S.2713). These changes bring tighter enforcement deadlines and alter several conditions for debt recovery. One of the key updates is the reduction of the statute of limitations for consumer debt lawsuits from six years to five years. Additionally, any payments made after this five-year period will no longer reset the clock on the statute of limitations. This means debt buyers must act quickly to pursue legal action or risk losing their ability to enforce debts through the courts.
Another important shift is the elimination of the "clock-reset" effect for payments made after the statute of limitations expires. Payments made beyond the five-year window will not restart or extend the collection period. This change helps protect consumers from unintentionally reviving old debts. For collectors, it also means they must carefully monitor when the original limitations period began instead of relying on recent payment activity to extend deadlines.
The legislation has also reduced the annual interest rate on judgments, dropping it from 12% to 3%. This adjustment significantly lowers the recovery value of older judgments, forcing debt buyers to reevaluate their strategies. Furthermore, collectors now have 10 years to enforce a judgment, with the option for only one 10-year renewal. After this period, they lose the ability to pursue the debt. This is a notable shift from the previous 20-year enforcement period.
"Families already in the grips of debt should not have to choose between putting food on their table and paying exorbitant costs charged by debt collection companies, or fear imprisonment." - Karen E. Spilka, Senate President, Massachusetts State Senate
New wage protections have also been introduced, further limiting collection options. The law now shields 90% of gross weekly pay or 65 times the minimum wage (roughly $975 per week), whichever is higher - an increase from the previous $750 threshold. This makes wage garnishment a less viable option for low-to-middle-income earners, reducing the recovery potential for many accounts. Additionally, the law explicitly prohibits imprisonment for failure to pay consumer debts and bars employers from discriminating against employees whose wages are being garnished.
These changes highlight the need for debt buyers to quickly reassess their portfolio valuations and compliance strategies to align with the new legal landscape.
Knowing the statute of limitations in Massachusetts is crucial for debt buyers to steer clear of legal risks and accurately assess portfolio value. For most consumer debts, the six-year limit determines whether creditors can legally enforce collection or must rely solely on voluntary payments. Once this timeframe passes, the debt becomes time-barred, which means actions like filing lawsuits, garnishing wages, or placing liens on property are no longer permissible.
Recent legislative updates have further tightened restrictions on recovering time-barred debts. Specifically, payments made after the statute of limitations has expired no longer restart the clock, meaning recent debtor activity won’t extend the collection period. These changes highlight the importance of strict compliance with debt collection laws.
Following these legal requirements is non-negotiable. Attempting to collect time-barred debt without proper disclosure violates Massachusetts law and could result in serious penalties under M.G.L. c. 93A. To avoid these issues, it’s essential to verify the complete chain of ownership and carefully track breach dates before pursuing legal action.
Effective portfolio management ties all these elements together. By categorizing accounts based on their breach dates, implementing required disclosure practices, and adjusting valuations to account for reduced enforceability, debt buyers can stay compliant and protect their investments. This proactive approach ensures better decision-making when determining whether to pursue or write off debts.
To figure out the first missed payment date on a debt, start by checking the loan or credit agreement for the initial scheduled payment date. This is usually the date when the borrower was first expected to make a payment. If the agreement doesn’t clearly state this, you can estimate it based on the loan disbursement date or the account opening date. The missed payment date is marked from the moment the borrower fails to fulfill this initial payment obligation.
In Massachusetts, making a partial payment or extending a settlement offer usually does not restart the six-year statute of limitations for debt collection. However, if the debtor formally acknowledges the debt in a manner that legally resets the time frame, the statute of limitations could begin anew. That said, this scenario is rare and largely hinges on the specific details of the case.
In Massachusetts, debt buyers are required to present specific documentation to prove a debt is legitimate. This includes evidence that the debt exists, the total amount owed, the identity of the original creditor, and verification confirming the debt's validity. These steps are particularly crucial if the debtor challenges the debt, as outlined by the state's debt validation laws. Proper documentation not only ensures compliance with these legal standards but also strengthens the enforceability of the debt.
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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