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The statute of limitations (SOL) for medical debt determines how long creditors can legally sue to recover unpaid bills. This timeframe varies by state, typically ranging from 2 to 10 years, depending on how the debt is classified (e.g., written contract, oral agreement). Once the SOL expires, the debt becomes "time-barred", meaning creditors can't sue, but the debt still exists and can appear on credit reports for up to 7 years.
Key points:
Understanding these timelines is critical for both collectors and debtors to ensure compliance and avoid legal risks.
The statute of limitations defines the time window during which creditors can take legal action to recover unpaid debts. For medical debt, this period typically ranges from 3 to 10 years, depending on state laws and how the debt is classified.
Medical bills are often treated as written contracts since patients usually sign documents agreeing to pay for services not covered by insurance. However, some states may categorize certain medical debts differently, such as open accounts or oral agreements, which typically have shorter time limits. For instance, in Illinois, the statute of limitations for written contracts is 10 years, while open accounts are limited to 5 years.
"In most cases, medical debt is considered a written contract. After all, think about all the paperwork you typically fill out when going to the doctor!"
– Courtney Nagle, NFCC
Once the statute of limitations expires, the debt becomes "time-barred". This means collectors can no longer sue you if you use the statute of limitations as a defense in court. However, the debt itself doesn’t disappear, and collectors can still contact you by mail or phone. Additionally, medical debt can stay on your credit report for up to 7 years from the date it was first reported as delinquent.
Let’s break down how the clock starts and why this timeframe is important for collectors.
The statute of limitations clock usually begins ticking from the date of the last payment or when the account first becomes delinquent. In some states, it might start when the first payment is missed or when the bill is due.
Certain actions can reset this clock, such as making even a small payment, acknowledging the debt in writing, or entering into a new repayment agreement. For instance, using a credit card to pay off part of the debt or even verbally acknowledging the debt to a collector could restart the limitation period.
"Every consumer interaction regarding a specific medical debt resets the statute."
– George Simons, JD/MBA, Founder and CEO, SoloSuit
If a lawsuit is filed right before the statute of limitations expires, the clock may be paused - referred to as "tolling" - allowing the legal process to continue even after the original deadline passes. Before making any payment or acknowledgment, it’s wise to request a debt validation letter to confirm the last date of account activity.
Understanding these triggers is key to navigating debt collection and avoiding unintentional resets.
For debt collectors and buyers, the statute of limitations plays a crucial role in determining the value and strategy for managing debt portfolios. Accounts that are nearing or have exceeded their statute of limitations lose legal enforceability, which can significantly lower their worth.
The concept of "zombie debt" highlights the importance of this timeframe. Some agencies buy old, time-barred debts at discounted rates and may try to get consumers to restart the clock by making small payments or acknowledging the debt. While collectors are allowed to contact debtors about time-barred debts, they must be upfront about the debt’s status and cannot threaten lawsuits that are no longer legally valid.
"A shorter statute of limitations is considered more consumer-friendly. By shortening the window of time in which you can be sued, a short SOL provides greater certainty."
– Courtney Nagle, NFCC
For portfolio managers, closely monitoring statute of limitations dates is essential to remain compliant and maximize recovery. Pursuing debts within the active period offers the best chance for legal enforcement, while proper disclosure of older debts minimizes legal risks. Legislative changes, like New York’s 2020 decision to shorten the medical debt limitation to 3 years, show how quickly these timeframes can shift and impact collection strategies.
Statute of Limitations for Medical Debt by State: 2-10 Year Timeline Comparison
State-specific rules significantly influence how medical debt collection timelines shape portfolio management and legal strategies.
Across the U.S., the statute of limitations (SOL) for medical debt varies widely - from as short as 2 years in Arkansas to as long as 10 years in states like Illinois, Kentucky, West Virginia, and Wyoming. Generally, most states classify medical debt under written contracts, which often carry a 6-year limitation period . However, differences in state laws mean that the classification and timelines can shift depending on the jurisdiction.
Arkansas, for example, has the shortest limitation period in the country at just 2 years, as defined by A.C.A. 16-56-106, offering more protection to debtors. New York limits medical debt collection to 3 years under N.Y. CPLR §213-b, aligning it with other types of consumer debt. On the other hand, Ohio allows up to 8 years, while Illinois permits a 10-year window for written contracts but reduces it to 4 years for oral contracts . In Kentucky, debts originating before 2014 could be pursued for up to 15 years .
For debt buyers and sellers, understanding these timelines is crucial for assessing risk and determining the value of a portfolio. For instance, a medical debt in California, where the statute of limitations is 4 years, carries a different risk profile compared to one in Kentucky, which has a 10-year window for most debts. Such differences require customized approaches to portfolio management and collection strategies.
The table below simplifies the statute of limitations for medical debt across selected states, helping identify jurisdictions with longer collection windows versus those with stricter debtor protections. Key points to note:
| State | SOL Period (Years) | Debt Classification | Notes |
|---|---|---|---|
| Alabama | 6 | Written Contract | |
| Alaska | 6 | Written Contract | |
| Arizona | 6 | Written Contract | |
| Arkansas | 2 | Medical Specific | A.C.A. 16-56-106 |
| California | 4 | Written Contract | |
| Colorado | 6 | Written Contract | |
| Connecticut | 6 | Written Contract | |
| Delaware | 3 | Written Contract | |
| Florida | 5 | Written Contract | |
| Georgia | 6 | Written Contract | |
| Illinois | 10 | Written Contract | 4 years if oral |
| Kentucky | 10 | Written Contract | 15 years if before 2014 |
| Maine | 6 | Written Contract | |
| Mississippi | 3 | Written Contract | |
| New York | 3 | Medical Specific | N.Y. CPLR §213-b |
| Ohio | 8 | Written Contract | |
| Pennsylvania | 4 | Written Contract | |
| Texas | 4 | Written Contract | |
| West Virginia | 10 | Written Contract | |
| Wyoming | 10 | Written Contract |
When analyzing portfolios, always verify the date of the last activity on the debt. Actions such as partial payments or written acknowledgments from the debtor can restart the statute of limitations clock, effectively extending the collection period . These nuances are critical for maintaining compliance and optimizing collection strategies.
State-specific protections significantly influence how creditors handle medical debt, offering additional safeguards for debtors beyond the statute of limitations (SOL). While the SOL defines the timeframe for filing lawsuits, many states impose further restrictions on debt collection practices. These include rules governing interest rates, wage garnishment, property liens, lawsuits, and credit reporting, making it more challenging for creditors to recover medical debts.
As of June 2025, 13 states have capped or eliminated interest on medical debt. For example, Arizona enforces a 3% interest rate cap, while Delaware completely bans interest charges on medical debt by hospitals and collectors. Such measures reduce the potential value of older debt portfolios.
Wage garnishment laws vary widely across states. In New York, wage garnishment for medical debt is entirely prohibited, while California restricts garnishment for low-income individuals. Although federal law allows garnishment of up to 25% of disposable income, 19 states enforce stricter limits. New Hampshire adds another layer of difficulty for creditors by requiring court approval for each garnishment request.
Property protections also play a key role. Thirteen states, including Nevada, New York, North Carolina, Maryland, and Virginia, completely ban home liens and foreclosures as tools for collecting medical debt. Even in states without outright bans, homestead exemptions shield a portion of home equity. These exemptions range from $5,000 to the entire home value in states like Florida and Texas.
Some states have introduced unique measures to protect medical debtors:
Additionally, 14 states now ban medical debt from appearing on consumer credit reports, including Minnesota, New York, and Connecticut. This removes a common pressure tactic used by collectors. Nevada goes a step further, barring medical debt reporting until hospitals comply with price transparency regulations.
"Federal medical debt protection standards are vague and rarely enforced. Patient protections at the state level help address key gaps in federal protections."
– Maanasa Kona, Associate Research Professor, Georgetown University
These state-level protections create diverse risk landscapes for medical debt portfolios. For instance, New York combines a 3-year SOL with bans on wage garnishment and foreclosures, making it a more challenging environment for debt recovery compared to states with fewer restrictions. Accurately valuing portfolios and crafting compliant collection strategies requires a deep understanding of these state-specific protections and their implications.
Debexpert's platform provides buyers and sellers with tools to analyze and filter portfolios, helping them navigate state-specific statutes of limitations, identify compliant portfolios, and reduce legal risks.
Debexpert simplifies portfolio management by offering tools tailored to state-specific requirements.
Users can filter medical debt portfolios based on statute of limitations (SOL) data for each state. This helps avoid issues with "zombie debt" - debt that is no longer legally enforceable - and ensures compliance. For instance, states like Illinois and Kentucky have longer SOL periods, typically 10 years, providing extended collection opportunities. In contrast, states like New York (3 years) and California (4 years) have shorter SOL periods. By targeting states with longer collection windows, buyers can focus on portfolios with higher recovery potential.
Portfolios from states with extended SOL periods offer more time for legal recovery, increasing their overall value. States such as Illinois, Indiana, Iowa, Kentucky, Louisiana, Missouri, Rhode Island, West Virginia, and Wyoming have 10-year SOL periods for written contracts - often the classification for medical debt. Additionally, Kentucky offers an even longer window for contracts executed before July 2014, with a 15-year SOL.
"Medical debt typically stays collectible for 3 to 10 years across U.S. states, based on each one's statute of limitations for written contracts or open accounts." - The Credit People
Sellers who provide detailed SOL information in their auction listings can increase buyer confidence and encourage more informed bidding. Key details to disclose include the debtor's state of residence, the date of the last payment, and any actions that may have reset the SOL clock, such as partial payments or written acknowledgments of the debt. Listings should also clearly identify any time-barred debt, where the legal window for filing lawsuits has expired. While collectors can still seek voluntary payments on time-barred debt, legal action is no longer an option.
Debexpert also offers secure file-sharing tools, allowing sellers to share sensitive account data safely. This ensures that buyers have access to all necessary documentation without compromising confidentiality.
Understanding the statute of limitations (SOL) is essential for anyone dealing with medical debt collection. The SOL determines the legal timeframe for pursuing debt recovery - ranging from 3 to 10 years, depending on the state. Once this period ends, the debt becomes time-barred, meaning collectors no longer have the right to sue for repayment. Attempting to take legal action on expired debt violates the Fair Debt Collection Practices Act (FDCPA) and could lead to regulatory penalties or civil lawsuits.
The state-by-state differences in SOL highlight the importance of precise tracking for effective portfolio management. For instance, Illinois allows a 10-year window for written contracts, while states like New York and California restrict legal actions to just 3 to 4 years. Additionally, many states have introduced extra safeguards - 14 states now prevent medical debt from being reported on credit files, and 13 states impose limits on interest rates or restrict the ability to place liens on homes.
For portfolio managers, keeping close tabs on SOL timelines is crucial for accurate valuation and recovery strategies. Tools like Debexpert’s filtering system can help users sort portfolios by state, pinpoint accounts that comply with legal requirements, and steer clear of "zombie debt" - accounts that pose legal risks without offering recovery opportunities. Sellers who provide detailed SOL information, such as the date of the last payment or actions that may have reset the clock, foster trust with buyers and encourage informed bidding.
To pinpoint the “last activity” date on your medical debt, take a close look at your payment history and account statements. This date typically refers to the most recent action on the account - whether it’s a payment, a new charge, or an adjustment like setting up a payment plan or acknowledging the debt.
You can usually find this information on your bills, insurance statements, or through your online patient portal. If you’re unsure, reach out directly to your healthcare provider or the collection agency. This date is important because it often marks the beginning of the statute of limitations for the debt.
The time limit for collecting a debt, known as the statute of limitations, can restart in many states under certain conditions. These include making a payment, acknowledging the debt in writing, or agreeing to pay it. In some states, even a verbal acknowledgment might be enough to reset the clock. That said, just talking to a debt collector - without confirming or agreeing to the debt - typically doesn’t restart the timeline. Since laws differ from state to state, it’s crucial to know the rules that apply to your situation.
State laws differ widely, but some offer safeguards against actions like wage garnishment, property liens, or negative credit reporting tied to medical debt. Depending on the state, these measures might be restricted or even outright banned. To understand how your state handles these issues, refer to trusted sources that provide clear, state-specific guidelines and regulations.
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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