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In Virginia, the statute of limitations determines how long creditors can legally sue you for unpaid debts. Here's a quick breakdown:
Once the statute expires, the debt becomes "time-barred", meaning creditors can no longer sue, though the debt itself doesn't vanish. Debt buyers and collectors must follow strict laws, including the Fair Debt Collection Practices Act (FDCPA) and Virginia's Consumer Protection Act (VCPA), to avoid penalties for trying to collect expired debts.
Key takeaway: Know the time limits and your rights to avoid unnecessary legal trouble.
Virginia Debt Collection Statute of Limitations by Debt Type
Virginia's laws set specific time limits for pursuing collections on different types of debt, which play a key role in assessing debt portfolios. Here's how the statutes break down:
For medical debt, the clock also runs for 3 years, as outlined in Virginia Code § 8.01-246(B). The statute clearly states:
"In any action... to collect medical debt, such an action is barred if not commenced within three years from the due date applicable to the final invoice."
When it comes to auto loans, which are governed by the Uniform Commercial Code for the sale of goods, the statute of limitations is 4 years according to Va. Code § 8.2-725.
Credit card debt can be trickier. While many courts treat it as an open-ended account with a 3-year limit, a 2011 advisory from Virginia's Attorney General suggested a 5-year limit might apply if the debt is tied to a written contract. Mark Cappel from Bills.com explained:
"The Virginia attorney general's office wrote an advisory in 2011 indicating it believes 8.01-246 applies to credit card debt."
Given this uncertainty, it's wise to approach credit card debt cautiously. It's also important to note that once a creditor secures a court judgment, it becomes enforceable for 10 years and can be renewed for up to 20 years, making judgments a critical factor in debt portfolio evaluations.
| Debt Category | Statute of Limitations | Legal Basis |
|---|---|---|
| Written Contracts | 5 Years | Va. Code § 8.01-246 |
| Oral Contracts | 3 Years | Va. Code § 8.01-246 |
| Credit Card Debt | 3 or 5 Years | Open Account / AG Advisory |
| Medical Debt | 3 Years | Va. Code § 8.01-246(B) |
| Auto Loans | 4 Years | Va. Code § 8.2-725 |
| Promissory Notes | 6 Years | Va. Code § 8.3A-118 |
| Mortgages | 5 Years | Va. Code § 8.01-246 |
| Personal Loans | 5 Years | Va. Code § 8.01-246 |
| Judgments | 10–20 Years | Va. Code § 8.01-251 |
Private student loans are subject to a 6-year limit under Va. Code § 8.3A-118. However, federal student loans are in a different category altogether; they have no statute of limitations, allowing the government to pursue collection indefinitely. This distinction is crucial when managing portfolios that include both private and federal student debt.
For Virginia tax debts, the state allows a 7-year statute of limitations for collection. However, there's an important caveat: unless explicitly stated in the law, there is no statute of limitations on actions brought by or on behalf of the Commonwealth. This gives state tax authorities broad enforcement powers, far exceeding those of private creditors.
Grasping the impact of time-barred debts and judgments on portfolio value is crucial for setting the right price and shaping effective recovery strategies. These factors directly shape what you pay for a portfolio and what you can realistically collect.
The statute of limitations plays a key role in determining both the price and recovery potential of a debt portfolio. Once a debt becomes time-barred, legal enforcement is no longer an option. While voluntary collection efforts, like phone calls and letters, can still continue, the absence of litigation as leverage significantly lowers the portfolio's market value.
This creates a clear pricing structure. Debts with open legal windows are more valuable because they allow for all collection methods, including lawsuits. On the other hand, as debts approach their expiration dates, their value diminishes. A good example of this is medical debt portfolios in Virginia. When the state reduced the statute of limitations from five years to three in 2021, it sped up the depreciation of these debts, forcing buyers to rethink their pricing models and recovery tactics.
To navigate this, consider using automated systems to flag accounts nearing their expiration dates. This allows you to prioritize accounts that still have enforceable legal windows, which carry greater recovery potential and resale value. When evaluating a portfolio for purchase, always verify the “cause of action” date - usually the date of the first missed payment - to calculate how much time remains for legal enforcement and adjust your pricing accordingly.
While time-barred debts tend to lower a portfolio's value, judgments can significantly alter the equation by extending the collection window.
Judgments extend the time you have to collect on a debt, which can increase a portfolio's value. However, to maintain this extended collection period, it's critical to docket abstracts of General District Court judgments in Circuit Court for renewal. In Virginia, judgments allow enforcement for 10 to 30 years, depending on when they were entered. For judgments entered before July 1, 2021, the initial enforcement period is 20 years. For those entered on or after that date, the initial period is 10 years, but it can be renewed twice, for an additional 10 years each, by filing a certificate of extension in the clerk's office.
Failing to renew a judgment on time means forfeiting the remaining collection period. To avoid this, use tracking systems to monitor expiration dates. The timing of when a judgment was entered also matters for valuation. For instance, a judgment from 2020 comes with a 20-year enforcement period, while one from 2022 starts with just 10 years. This difference can significantly affect long-term recovery projections and should be factored into your pricing models.
Additionally, Virginia law provides strong collection tools for judgments, such as wage garnishment of up to 25% of disposable weekly income and bank account levies (with a $5,000 homestead exemption). These tools make judgments highly effective for recovery, which is why they tend to command higher market values.
In Virginia, managing time-barred debts demands strict adherence to both federal and state regulations. While the statute of limitations doesn’t erase a debt, it does prevent creditors from enforcing collection through legal action. Failing to follow these rules can lead to financial penalties and damage to your reputation. Let’s break down the key compliance requirements and the consequences of violations.
The Fair Debt Collection Practices Act (FDCPA) lays out clear guidelines for handling time-barred debts. Collectors cannot file lawsuits or threaten legal action on debts that have surpassed the statute of limitations. Additionally, any communication with debtors must include a disclosure that such debts cannot be pursued in court.
Virginia’s Consumer Protection Act (VCPA) adds another layer of protection for consumers. Misrepresenting a time-barred debt as legally enforceable can result in penalties, including damages, attorney’s fees, and punitive measures. Moreover, using fake legal documents - like counterfeit warrants or court notices - to collect debts is considered a criminal offense under Virginia Code § 18.2-213, classified as a Class 4 misdemeanor.
Specific rules apply to medical debt under Virginia law § 59.1-444.4. Reporting medical debt to consumer credit agencies is prohibited, and beginning July 1, 2026, the Medical Debt Protection Act will introduce additional restrictions. These include banning extreme collection actions, like foreclosures or liens, for the first 120 days and capping interest rates at 3% per year after 90 days. Violating these provisions is treated as a prohibited practice under the VCPA.
To ensure compliance, consider using automated systems to flag accounts nearing or exceeding the statute of limitations. Develop communication scripts that meet legal standards and include required disclosures about a debt’s time-barred status. If a debtor formally requests that you cease communication, stop all contact immediately, except for legally mandated notices.
Non-compliance with debt collection laws can lead to serious consequences, both financial and reputational. Violating the FDCPA may result in civil lawsuits for damages, while breaches of the VCPA can lead to actual damages, attorney’s fees, and punitive penalties. Furthermore, using fake legal documents to collect debts is a criminal offense under Virginia Code § 18.2-213, punishable as a Class 4 misdemeanor.
The reputational fallout from such violations can be just as damaging. For instance, the Federal Trade Commission reported over 140,000 debt collection complaints in the second quarter of 2025 - an alarming increase from about 44,000 in the same period the previous year. Even a single violation can spark regulatory scrutiny and harm your standing in the industry.
To mitigate these risks, conduct regular data audits. Ensure debts older than seven years are removed from credit reports, as required by the Fair Credit Reporting Act (FCRA). Maintain detailed records of all interactions to demonstrate good-faith compliance in case of an investigation.
When managing debt portfolios, it’s crucial to understand how certain debtor actions can restart the statute of limitations (SOL). This knowledge helps safeguard your collection rights and ensures compliance while maintaining the value of your portfolio. Proper documentation of these events is key to avoiding legal risks.
Even a small partial payment - say, $50 on a five-year-old credit card debt - can reset the statute of limitations. The clock restarts from the date of that payment.
Written promises to pay and written acknowledgments also have significant legal implications. According to Virginia Code § 8.01-229(G):
"If any person against whom a right of action has accrued on any contract... promises, by writing signed by him or his agent, payment of money on such contract, the person to whom the right has accrued may maintain an action for the money so promised, within such number of years after such promise as it might be maintained if such promise were the original cause of action."
"An acknowledgment in writing, from which a promise of payment may be implied, shall be deemed to be such promise within the meaning of this subsection."
This means that a signed letter, email, or digital acknowledgment from the debtor (or their authorized agent) can create a new right of action. However, verbal promises alone do not have the same effect in Virginia.
For installment contracts, each missed payment triggers a new statute of limitations for that specific installment. This rolling timeline ensures that the enforceability of the debt is maintained as defaults occur.
Accurate documentation is critical. Keep detailed records of every transaction, including the exact date and amount of any payment received. Automated payment systems with timestamp features are especially helpful for creating a reliable audit trail. Additionally, store all written communications - whether emails, text messages, or signed documents - that might imply a promise to pay. These records should be centralized and easily accessible for verification.
Before initiating legal action, always confirm the cause of action date by reviewing payment histories and correspondence. Pursuing a debt without sufficient proof could lead to violations of the Fair Debt Collection Practices Act (FDCPA).
The table below summarizes key debtor actions and the corresponding documentation required:
| Action by Debtor | Legal Effect | Documentation Required |
|---|---|---|
| Partial Payment | Restarts the SOL clock from payment date | Transaction receipt, bank record, portal timestamp |
| Signed Written Promise | Creates a new right of action | Signed letter, email, or digital acknowledgment |
| Written Acknowledgment | Implies a promise to pay; resets the SOL timeline | Writing that implies a payment promise |
| Installment Default | Retriggers the SOL for that installment | Record of the missed installment date |
In Virginia, the statute of limitations for debt collection depends on the type of debt: 3 years for oral contracts, open accounts, and medical debt; 5 years for written contracts; and 6 years for promissory notes. These timelines are crucial because once a debt becomes time-barred, it cannot be enforced legally in court, significantly reducing its market value.
Navigating these legal boundaries requires precision. Pursuing legal action or threatening to sue on time-barred debt violates the Fair Debt Collection Practices Act (FDCPA), exposing collectors to civil penalties and attorney fees. Attorney Thomas Breeden highlights the importance of raising the statute of limitations defense in court:
"If the statute of limitations is not properly raised in a lawsuit on the debt, the court will likely hold that the debtor has waived that defense and can be sued on the debt, despite it being otherwise stale".
This makes tracking the "cause of action" date - a key point when the clock starts ticking on the statute of limitations - essential for any legal proceedings.
To manage portfolios effectively, automated systems can help flag accounts nearing their expiration and prioritize those still actionable. For example, judgments offer a much longer enforcement window, remaining valid for 20 years and eligible for renewal before expiration. Additionally, the statute of limitations may restart if a debtor makes a partial payment or acknowledges the debt in writing. Keeping thorough records of payments and communications can provide the evidence needed to enforce debts under these circumstances.
Medical debt requires extra attention due to recent changes in Virginia law. The statute of limitations for medical debt is now 3 years from the date of the final invoice or breach of a payment plan. Moreover, medical debts can no longer be reported to consumer reporting agencies.
When it comes to debt in Virginia, the statute of limitations begins ticking from the moment the debt becomes due. This is typically marked by either the date of the last payment made or the point when the debt was originally incurred. However, it's important to note that certain actions can reset this clock. For example, if a payment is made on the debt or if the debtor acknowledges the debt in some way, the time frame for legal enforceability may restart.
Yes, in Virginia, if you make a partial payment on a debt or provide a written acknowledgment of it, the statute of limitations can restart. These actions essentially reset the clock, allowing the creditor more time to legally enforce the debt.
When handling a portfolio that includes time-barred debts or judgments in Virginia, understanding the statute of limitations is crucial. Typically, the limits are as follows: three years for open accounts, five years for written contracts, and ten years for judgments (which can be renewed for up to 20 years).
Since time-barred debts cannot be enforced through lawsuits, these debts should either be excluded from the portfolio or significantly discounted. This approach helps ensure compliance with legal requirements and minimizes potential legal risks.
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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