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In Utah, the statute of limitations for debt collection depends on the type of agreement. Written contracts, like credit cards or auto loans, have a 6-year limit, while oral agreements and open accounts, such as store-specific charge accounts, have a 4-year limit. Once this period expires, the debt becomes "time-barred", meaning creditors cannot sue to enforce it. However, debtors must raise this as a defense in court.
Key points:
Events like bankruptcy or military service can pause the statute, while payments or written acknowledgment can restart it. Debt buyers and collectors must ensure compliance with these rules to avoid legal risks.
Utah Debt Collection Statute of Limitations by Debt Type
In Utah, the statute of limitations for debt collection depends more on whether the debt stems from a written or oral agreement than on whether it is secured or unsecured. This distinction determines how long creditors have to take legal action to collect. Below is a breakdown of the timeframes for consumer, medical, and auto loan debts, along with key details that affect these limits.
For most consumer debts, like credit cards and personal loans based on written agreements, the statute of limitations is 6 years. However, if a creditor files a lawsuit under an "account stated" claim - relying solely on transaction history - the limit drops to 4 years. Similarly, store-specific charge accounts (e.g., for furniture or appliances) and debts based on verbal agreements are also subject to a 4-year limit.
Medical debts typically fall under the 6-year limit, as healthcare providers often require written agreements that outline payment terms and may include clauses for collection costs or attorney fees. If no written agreement exists and the debt is based on a verbal understanding, the statute of limitations is reduced to 4 years.
Auto loans, which are structured as written contracts, also adhere to the 6-year limit, along with other secured debts. For these types of loans, the timeline might begin not only when payments are missed but also when other contractual obligations - like maintaining vehicle insurance - are violated.
The statute of limitations kicks off on the default date - the point when the first payment is missed. For credit agreements governed by Utah Code § 78B-2-309, the six-year window begins on the latest of these occurrences: when the debt originated, when there’s a written acknowledgment of the debt, or when a payment is made on it.
"The statute of limitations for a credit agreement... begins the later of the day on which: (a) the debt arose; (b) the debtor makes a written acknowledgment of the debt or a promise to pay the debt; or (c) the debtor or a third party makes a payment on the debt." - Utah Code § 78B-2-309
For open store accounts and labor-related debts, which have a four-year limit, as well as promissory notes with defined maturity dates, the clock begins either on the last charge or payment date, or the maturity date - unless the debt is accelerated. These starting points set the stage for how the timeline unfolds, but certain events can interrupt it.
Some situations can pause, or "toll", the statute of limitations. For instance, if a debtor files for bankruptcy, the automatic stay freezes the clock for as long as the stay is in effect. Similarly, if a debtor moves out of Utah or is serving on active military duty, that time is excluded from the calculation. Another example comes from the Uniform Debt-Management Services Act: if a debt-management service provider intentionally misrepresents required information to the debtor, the limitations period is also paused. Recognizing these tolling events is key for evaluating the value of debt portfolios and staying on top of compliance risks.
Certain actions by a debtor can reset the statute of limitations, which is six years for written contracts and four years for oral agreements. One of the most common triggers is a partial payment. As the Stephenson Law Firm explains, "Making a payment on a time-barred debt will revive, or restart, the statute of limitations. Even a tiny payment will revive the debt". However, this payment must come directly from the debtor - not from a third party acting on their behalf. Debt buyers need to confirm the source of any payments, as fraudulent or "phantom" payments intended to extend the statute are illegal under the FDCPA.
Other debtor actions, such as written acknowledgment of the debt, can also restart the clock. This includes communication like a dispute letter, pay-for-delete letter, or even a text message. The Stephenson Law Firm notes, "One poorly written dispute letter, pay for delete letter, or text message is sufficient to restart the statute of limitations if it contains an acknowledgment of the debt". Essentially, even a brief email or text admitting to the debt can turn a time-barred account into one with a renewed enforceable period.
Settlement agreements and payment plans can have a similar effect. When a debtor agrees to a settlement offer or enters into a new payment arrangement, they create a fresh written promise to pay, which resets the limitations period. For example, Utah Code § 78B-2-309 specifies that for credit agreements, the limitations period begins on the later of three events: when the debt originated, when a written acknowledgment or promise to pay was made, or when a payment was received. These triggers highlight the importance of careful evaluation when assessing portfolios.
For debt buyers, reviewing the chain of title and account notes for any written communication is critical. This verification helps ensure compliance and supports accurate portfolio valuation. Each debt must be individually examined to determine whether a restart event has occurred and if it is legally enforceable. Importantly, if a debtor has multiple accounts with the same creditor, a payment on one account does not automatically restart the statute of limitations for others. Careful attention to these details is key to avoiding legal and compliance risks.
When a debt becomes time-barred, its market value drops significantly, often selling for mere pennies on the dollar. For example, written contracts with a six-year statute of limitations tend to hold more value compared to oral agreements, which are limited to just four years.
In Utah, the statute of limitations operates as an affirmative defense. This means it doesn’t automatically prevent a lawsuit. If a debtor doesn’t raise this defense in court, they could unknowingly waive it, allowing creditors to obtain a judgment on a debt that’s technically time-barred. Additionally, the Fair Debt Collection Practices Act (FDCPA) prohibits collectors from suing or threatening lawsuits over time-barred debts. Violating this rule can lead to statutory damages. Because of this, identifying time-barred debts accurately is critical for managing portfolio value.
To properly assess a portfolio, managers need to confirm the enforceability of each account. This starts with determining the default date. For written contracts, the six-year limitation begins from the last payment date, while oral agreements and open accounts follow a four-year limit. Misclassifying a debt type could result in improper collection efforts.
Utah’s "borrowing statute" (U.C.A. § 78B-2-103) adds another layer of complexity. If a debt originated in another state where the statute of limitations has already expired, it is also considered expired in Utah. This is particularly relevant for credit card portfolios tied to states with shorter limitation periods. In some cases, contracts may include specific maturity dates that extend enforceability beyond the usual statutory limits.
Accurate identification of time-barred debts plays a key role in both valuation and risk management. Debexpert’s analytics tools help users segment debts by type and enforceability, ensuring more precise portfolio valuation. For instance, the platform allows clear differentiation between written contracts with six-year limits and oral agreements with four-year limits, enabling better predictions of collection potential. Real-time tracking also helps identify debts nearing or past their statutory expiration.
Debexpert also offers secure file sharing with end-to-end encryption, allowing buyers to review detailed records like payment histories and written acknowledgments. Even a small payment or acknowledgment can reset the statute of limitations, making previously time-barred debts enforceable again. By using these tools during the presale process, buyers can avoid acquiring portfolios filled with unenforceable debts, while sellers can price their portfolios more accurately based on the legal status of each account.
Debt collectors in Utah must navigate both state and federal regulations to remain compliant. Agencies are required to register with the Division of Corporations and Commercial Code and maintain a $10,000 bond to operate legally in the state. Additionally, under Utah Code U.C.A. 12-1-8, collectors cannot initiate lawsuits on accounts that exceed the statute of limitations.
Before acquiring or collecting on any debt, it’s crucial to verify its classification. Misclassifying debts can lead to violations of the FDCPA, which may result in statutory damages. For example, promissory notes with specified maturity dates should be carefully reviewed, as the limitation period typically begins at maturity - unless the creditor has accelerated the debt. Another important consideration is Utah's borrowing statute (U.C.A. § 78B-2-103). If a debt originated in another state and is already time-barred there, it may also be unenforceable in Utah.
After confirming the classification and legal status of the debt, it’s essential to adopt precise practices when dealing with time-barred portfolios.
Accurate classification lays the groundwork for handling time-barred debt responsibly. Collectors are prohibited from suing or even threatening lawsuits on these debts.
"Threatening to sue you when the debt is time-barred or attempting to deceive you into thinking they can sue you when they can't are violations of the Fair Debt Collection Practices Act." – Stephenson Law Firm
Sellers should provide complete and detailed documentation - such as payment histories and signed contracts - when transferring portfolios. This ensures buyers can identify unenforceable debts and avoid legal pitfalls. Practices like "phantom payments", which illegitimately reset the statute of limitations, must be avoided, as they expose both parties to FDCPA violations.
When marketing time-barred debt, use clear and accurate language to represent its legal status. While Utah law doesn’t require disclosure of a debt's time-barred status unless the debtor inquires, maintaining transparency can help prevent accusations of deceptive practices. Buyers, in turn, should enforce strict oversight to ensure their collection agents fully understand which debts can and cannot be litigated. This proactive approach helps avoid costly legal errors and protects both buyers and sellers from compliance risks.
Utah's statute of limitations plays a key role in debt portfolio trading. The value of a debt portfolio often depends on the enforcement periods: 6 years for written contracts and 4 years for oral accounts. Once these timeframes expire, the debt becomes unenforceable, and time-barred debt typically sells for a fraction of its original value.
The Fair Debt Collection Practices Act (FDCPA) adds another layer of complexity. Attempting to collect on expired debts can lead to statutory damages and attorney fees for collectors. However, because the statute of limitations is an affirmative defense, courts won’t automatically dismiss cases based on age. This creates opportunities for creditors but also puts buyers at risk of compliance violations if they mishandle outdated accounts. Proper classification of debt is essential to avoid these pitfalls.
The importance of accurate classification is clear. As the Stephenson Law Firm explains:
"The statute of limitations for debt is far more complicated [than it sounds]. You have to carefully evaluate the origin and nature of debt to be sure you apply the correct statute of limitations".
For example, misclassifying a store-specific charge account as written debt could lead to pursuing unenforceable claims, potentially violating federal law.
Debexpert’s portfolio analytics tools provide a solution by helping traders identify time-barred accounts, evaluate compliance risks, and make smarter decisions about buying or selling portfolios. By combining thorough documentation with platform-based insights, traders can navigate Utah’s intricate legal requirements, reduce FDCPA risks, and focus on maximizing the value of enforceable debts.
To pinpoint the default date, start by reviewing your original loan or credit agreement. This document usually outlines when the debt was incurred or when payment was due. If you don’t have access to it, try checking your payment history, account statements, or any related correspondence. Knowing the default date - or the date of your last payment - is essential for determining whether the debt falls under Utah’s six-year statute of limitations for written contracts. If you're uncertain, it’s best to consult a legal professional for guidance.
No, receiving a text or email does not reset Utah’s statute of limitations for debt collection. Although such communication might serve as an acknowledgment of the debt, it typically does not restart the clock on the limitation period. For personalized advice, it’s best to consult with a legal professional.
If you’re facing a lawsuit over a time-barred debt in Utah, it’s crucial to respond to the lawsuit and use the statute of limitations as an affirmative defense. This defense can allow you to request the court to dismiss the case. To ensure your response is filed correctly and complies with Utah’s legal requirements, consider consulting legal resources or seeking professional advice.
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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