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Missouri's debt collection laws set clear deadlines for creditors to file lawsuits based on the type of debt. Here's what you need to know:
Key points:
Understanding these limits helps avoid legal risks and ensures proper compliance for debt buyers, sellers, and collectors.
Missouri Debt Collection Statute of Limitations by Debt Type
Missouri classifies debts into two main categories: written and oral. Each has specific time limits for collection, which play a key role in compliance and debt portfolio management.
According to MO Rev Stat §516.110, actions based on written agreements for the payment of money or property must be initiated within 10 years. This applies to documents like promissory notes, loan agreements, and real estate contracts. The statute specifically includes "any writing, whether sealed or unsealed, for the payment of money or property".
For promissory notes, the 10-year clock starts ticking either from the due date or, in the case of acceleration, from the accelerated due date. For demand notes, the period begins when a demand is made, and no action can be taken after 10 years of inactivity.
This extended timeframe often increases the appeal of written agreements for creditors. In contrast, oral agreements and open accounts have a much shorter limitation period.
Missouri enforces a 5-year statute of limitations for oral contracts or implied obligations that lack a written record, as outlined in MO Rev Stat §516.120. This shorter period can affect both the collectability of debts and their value in a portfolio.
Credit card debt typically falls into this category. RKB Law, LLC clarifies:
"While credit card companies and some debt buyers may try to say that a credit card is controlled by a written agreement, there usually is not a written contract that the parties entered into when a credit card is issued".
Without a signed agreement, these accounts are subject to the 5-year limit.
Auto loan deficiencies, which arise when a lender repossesses and sells a vehicle but the borrower still owes money, have an even shorter 4-year statute of limitations. This makes timely action critical for these accounts.
Next, let’s look at medical and real estate-related debts, which follow different rules despite being written agreements.
Medical debt is treated as a written contract, with a 10-year statute of limitations starting from the billing date or the last payment made. However, it’s important to distinguish this from medical malpractice claims, which are subject to a separate 2-year limit.
Real estate notes and mortgages also fall under the 10-year statute. For debts with structured payment plans, the timeframe is calculated from each missed payment or from the date the creditor accelerates the balance. This extended period can make real estate-backed debt more attractive for portfolio acquisitions, provided there’s sufficient documentation to support the claim.
Understanding these timelines is essential for making informed decisions about debt collection and trading within Missouri’s legal framework.
In Missouri, the statute of limitations begins when the debt becomes collectible - not when the contract is signed. Essentially, the clock starts ticking when the creditor has the right to demand repayment.
For credit card debt, the five-year period usually starts on the date of the last activity on the account, such as the last purchase or the most recent payment. For example, if you stopped using your card on March 15, 2021, that date would mark the beginning of the timeline.
Written contracts and promissory notes are treated differently. If a promissory note has a specific due date, the 10-year period starts on that due date - or on an accelerated due date if the creditor demands early repayment. For demand notes, the timeline begins when the creditor formally requests payment. If no demand is made and no payments are made for ten consecutive years, the debt becomes unenforceable.
For judgments, the statute of limitations is also 10 years, starting from the date the judgment is entered. However, each garnishment payment restarts the 10-year period entirely.
These rules show how different types of debt trigger the statute of limitations in unique ways. Actions like partial payments or written acknowledgments can also reset the clock, as explained below.
Making a partial payment on a debt resets the statute of limitations, effectively starting a new timeline for legal action.
Under Missouri law, once a debt is barred by the statute of limitations, it can only be revived if the debtor signs a written promise to pay. Verbal promises or acknowledgments won’t restart the clock on an expired debt.
Other actions, like agreeing to a new payment plan or signing a settlement agreement, will also reset the statute of limitations. Before making any payment on an older debt, it’s a good idea to confirm its age and status by requesting validation information from the collector.
For joint debts, Missouri law provides an important safeguard: a payment or promise made by one debtor does not restart the statute of limitations for other joint debtors. Each debtor’s timeline is tracked individually.
Missouri's statute of limitations plays a key role in determining the value of debt portfolios and shaping collection strategies. Knowing these time limits is essential for evaluating portfolio risks and planning acquisitions effectively. Debt tied to written contracts and promissory notes tends to command higher prices because the 10-year enforcement period allows for a longer recovery window. In contrast, credit card debt and auto deficiencies are valued lower due to their shorter collection periods of 5 and 4 years, respectively.
Misjudging a debt's age can lead to costly legal risks. While collectors are allowed to request voluntary payments on debts past the statute of limitations, filing lawsuits or even threatening legal action on such debts violates the Fair Debt Collection Practices Act (FDCPA). This exposes debt buyers to potential liabilities:
"While collection companies may attempt to get you to voluntarily pay a credit card debt that is older than five years, they do not violate the Fair Debt Collection Practices Act unless they file suit after the statute of limitations has run, or if the debt collector states that they are going to file suit when the statute of limitations has lapsed." – RKB Law, LLC
Because of these legal challenges, portfolios with assets tied to longer enforcement windows are more desirable. Missouri judgments, for example, are particularly attractive in the debt trading market. These judgments have a 10-year statute of limitations, which can be extended for another 10 years through a motion to revive and a show-cause hearing. Each garnishment payment also resets the limitation period, providing extended recovery opportunities.
Missouri law treats the statute of limitations as procedural, meaning that Missouri's rules apply even if a contract specifies a different state's laws. However, if the debt has already expired in its original jurisdiction, that serves as a valid defense in Missouri courts.
To break it down further, the table below highlights how different types of debt are impacted by these statutes and their associated risks.
| Debt Category | Statute Period | Risk Level | Trading/Valuation Impact |
|---|---|---|---|
| Written Contracts / Notes | 10 Years | Low | High valuation; stable long-term recovery window. |
| Missouri Judgments | 10 Years | Low | Premium pricing; enforceable for decades if revived. |
| Credit Card Accounts | 5 Years | Medium | Moderate valuation; risk of FDCPA claims if age is miscalculated. |
| Oral Agreements | 5 Years | High | Lower valuation; difficult to prove in court. |
| Auto Deficiencies | 4 Years | High | Lowest valuation; shortest window for legal recovery. |
| Promissory Notes (UCC) | 10 Years | Low | High valuation; governed by specific UCC 400.3-118 limits. |
In Missouri, debt buyers and collectors need to follow both federal and state laws to avoid penalties. Failure to comply can lead to statutory damages or even class action lawsuits. These legal guidelines are the foundation of lawful debt collection and play a key role in managing portfolios responsibly.
The Fair Debt Collection Practices Act (FDCPA) is a federal law that protects Missouri consumers from abusive collection methods. Under the FDCPA, collectors must validate debts within five days of initial contact and pause collection efforts if the debtor disputes the debt within 30 days[8,19]. However, it’s important to note that this law applies specifically to third-party collectors and debt buyers, not original creditors.
Violating the FDCPA can be costly. Courts may impose penalties of up to $1,000 per violation, and in class action cases, damages could total up to $500,000 or 1% of the collector’s net worth, depending on which is lower. Collectors are also required to comply with cease-and-desist requests from consumers.
On the state level, the Missouri Merchandising Practices Act (MMPA) offers additional protections. This law targets deceptive practices, especially when the debt stems from the sale of goods or services. Unlike FDCPA claims, which are usually handled in federal court, MMPA violations are addressed in Missouri Circuit Court. Consequences can include actual damages, punitive damages, and attorney fees.
The Missouri Division of Finance also plays a significant role by overseeing licensing for lenders such as payday loan providers, installment lenders, and retail credit companies. Debt professionals must ensure that collection agencies and lenders hold the proper licenses to avoid regulatory trouble.
Missouri also has specific rules for wage garnishment. Generally, garnishment is capped at 25% of disposable income (or 10% for heads of household). Federal benefits are mostly exempt from garnishment, except in cases involving certain types of debt[8,19,20].
Understanding and adhering to these requirements is crucial for minimizing risk and ensuring compliance in debt collection and portfolio management.
Managing debt portfolios in Missouri means juggling the need for returns with strict legal compliance. The state’s statute of limitations varies by debt type - from 4 to 10 years - creating both risks and opportunities for those involved in buying and selling. A structured approach to evaluating and trading portfolios can help reduce legal risks while uncovering valuable assets. This approach also sets the stage for thorough due diligence during portfolio acquisition.
Before diving into any Missouri debt portfolio, it’s crucial to confirm the correct debt categorization for each account. For guidance on the 10-year, 5-year, and 4-year limitation periods, refer to earlier details in this discussion. Mislabeling a credit card account as a 10-year written contract could result in Fair Debt Collection Practices Act (FDCPA) violations.
Another key step is auditing the Date of Last Activity (DLA) for each account. For credit card debts, the statute of limitations starts after the last purchase or payment. For written contracts, it might begin with the contract date, the last performance date, or the last payment made. Getting this right is critical to avoid FDCPA violations and overpaying for portfolios. As RKB Law, LLC explains:
"While collection companies may attempt to get you to voluntarily pay a credit card debt that is older than five years, they do not violate the Fair Debt Collection Practices Act unless they file suit after the statute of limitations has run".
Filing a lawsuit on expired debt is a direct breach of the FDCPA.
It’s also important to identify any "restart" events in the account's history. For example, a partial payment or written acknowledgment from the debtor can reset the statute of limitations clock in Missouri. This means a debt that initially seemed time-barred could still have years of collectability left. For judgment portfolios, check whether any garnishment amounts were collected, as each garnishment resets the 10-year judgment period.
Once due diligence is complete, using the right platform can streamline compliance and efficiency. Debexpert offers a secure and compliant solution for trading debt, with features designed to simplify the process and ensure clarity around statute-of-limitations documentation.
One standout feature is the secure file-sharing system with end-to-end encryption. Sellers can upload detailed account histories, payment records, and documentation outlining the statute of limitations status for each debt. Buyers can access these masked files during their evaluation phase, enabling a thorough review before making a purchase.
Debexpert’s portfolio analytics tools allow buyers and sellers to categorize debts by type, age, and remaining collection window. This makes it easier to pinpoint accounts that align with Missouri’s statute of limitations rules. Additionally, the platform’s real-time chat feature helps resolve any questions about documentation or account status before finalizing a deal. Every participant undergoes compliance verification, adding another layer of security to each transaction.
Missouri's statute of limitations plays a crucial role in shaping portfolio valuation, legal enforceability, and compliance risks. With timeframes ranging from 4 years for auto deficiencies to 10 years for written contracts and judgments, understanding these limits is essential to avoid costly mistakes. Misclassifying debts or attempting to collect on expired accounts can lead to FDCPA violations, opening the door to expensive litigation.
One key detail to remember is that a partial payment or written acknowledgment can reset the clock on the limitation period, turning a dormant account into a collectible asset once again. Missouri judgments, with their extended enforceability and revival provisions, offer unique opportunities for strategic portfolio management.
Accurate debt categorization and consistent auditing are the cornerstones of compliance. For instance, professionals need to confirm whether accounts fall under the 5-year limit for credit cards and oral agreements or the 10-year limit for promissory notes and written contracts. Staying vigilant about judgment expiration dates ensures collection rights are not lost.
Debexpert’s secure file-sharing and portfolio analytics tools provide a practical solution for maintaining compliance. These tools allow buyers and sellers to categorize debts by type and age, evaluate the remaining collection windows, and resolve documentation issues before closing transactions. Incorporating these resources into your strategy helps ensure compliant, efficient debt trading while navigating Missouri’s legal requirements with confidence and reducing legal risks.
In Missouri, the clock for the statute of limitations on your debt typically starts ticking based on specific actions related to the debt. For written contracts, the start date is tied to either your last payment or a written acknowledgment of the debt. On the other hand, for open-end accounts - such as credit cards - it begins when the first payment was due.
To pinpoint the exact start date, take a close look at your payment history or account statements. These documents will help you confirm the key date that determines when the statute of limitations period begins.
In Missouri, if you make a voluntary payment on a debt after the statute of limitations has passed, it can restart the clock on that debt. This means creditors might regain the ability to take collection actions against you. Be mindful of making payments or even acknowledging old debts, as doing so could unintentionally reset the timeframe for potential legal action.
Debt buyers need to ensure that the statute of limitations for the specific type of debt they are attempting to collect has not expired. In Missouri, the limitation period for most contractual obligations is five years. Pursuing debts beyond this timeframe can lead to legal complications, as attempting to collect on time-barred debts may violate the law.
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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