Indiana Statute of Limitations on Debt

Melissa Lyken

February 18, 2021

Don't let debt collectors use illegal tactics on you.

Summary: Indiana protects consumers against debt collectors bringing up old debts. Find out if your creditor is trying to collect on a debt that expired under the Indiana's statute of limitations. You might be able to put that debt behind you and move on with your life.

Indiana has a specific time frame that creditors can pursue lawsuits for debts. This timeframe is commonly referred to as the statute of limitations. Depending on the kind of debt you owe, this period varies anywhere from two to twenty years.

So, if a creditor doesn't file a lawsuit against a debtor during the prescriptive period, the debt collector or creditor loses the right to sue for the debt later. You may be wondering if the statute of limitations has lapsed on your debt. Keep reading to find out.

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Learn How the Statute of Limitations on Debt Works

If you owe money to a creditor or your debt was sold to a debt collection agency, the creditor has a set amount of time to file a lawsuit against you for the debt. The time frame varies from one state to another, depending on the debt involved.

Indiana law provides a different time frame for written and oral contracts. For example, written contracts have a limitation period of 6-10 years from the date of default. On the other hand, oral or unwritten contracts have a period of six years. The statute becomes active from the date your payment is due or the last time you made payment before you defaulted.

Now that you have a general overview of how the statute of limitations in Indiana works, let's look at the different categories of debts and their respective perceptive periods.

Know the Statutes of Limitations for Different Types of Debt in Indiana

In Indiana, there are two types of statutes of limitations on debt:

  • Statute of limitations on unwritten contracts
  • Statute of limitations on written contracts

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1. Unwritten Contracts - 6 years

According to Indiana law, creditors or debt collectors can charge debtors for breach of unwritten contracts within six years after the cause of action accrues. This provision applies to credit card debts, rent, damages resulting from detention of personal property, and recovery of personal property.

2. Written Contracts- 4-10 years

A written contract is a signed agreement between the debtor and the creditor stating the amount of debt, nature of the debt, and maturity date. This category also includes promissory notes, bills of exchange, and other written contracts. A creditor has 6-10 years to collect debt associated with written contracts.

Here is a closer look at the most common written contracts:

3. Medical Debt- 6 to 10 years

If your medical debt entails a written contract, a creditor can file a lawsuit within six years.

4. Promissory Note- 6 years

If your debt is a promissory note, this debt is a written agreement to pay back the debt at a fixed interest rate by a specific date and time.

Student loans and home loans are considered promissory notes. In Indiana, a creditor has six years to file a lawsuit for defaulted payment.

5. Contract for Sale of Goods- 4 years

A creditor has four years to file a lawsuit for breach of contract for the sale of goods. In Indiana, the law allows both parties to reduce the period of limitation, but they can't extend it. This means the period can be reduced to three, two, or one year, but not less than one year.

6. Auto Loan Debt- 4 years

For car loans, the lender has four years to file a collection lawsuit from the default date.

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Indiana Statute of Limitations
on Debt

Debt Type

Deadline in Years

Oral

6

Written

4-10

Medical

6-10

Promissory

6

Sale of Goods

4

Auto

4


Source: Findlaw



Be Aware of How the Statute of Limitations Can Restart

The statute of limitation can start again when a debtor makes a written acknowledgment to pay or voluntarily make payment before the expiration of the prescriptive period. In this case, the debt collector may decide to extend the period for collecting the consumer's debt by filing for judgment.

In Indiana, the statute of limitations by judgment is ten years, but it can be renewed, further extending the collection period. This means once a creditor makes a charge against the debtor, the judgment is collectible for up to ten years. Before the ten years lapses, the creditor may have the judgment renewed, adding ten more years. The period starts running from:

  • The date you were last charged for unpaid debt
  • The date of entry of the judgment or
  • The last date of either event

If the judgment is not renewed on time or the debt collector doesn't do anything to execute that judgment for a specified period, it lapses. When a judgment lapses, the debtor can't be arraigned in court for unpaid debt. This means the debt collector can't:

  • Seize your property
  • Garnish your wages
  • Make you appear for an examination
  • Seize your bank account

A debt collector can renew the statute of limitation once or twice. If the judgment against the debtor lapses, the debt collector can still revive it within a specific time limit. The time frame begins when the judgment becomes dormant, or the last time the collector tried to collect debt on the judgment.

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Here's an example: Collins Asset Group v Alkhemer Alialy Case

In this case, the defendant obtained a mortgage in September 2007 and defaulted on payments in July 2008. The loan was transferred to a debt collector, the plaintiff, in October 2016, who accelerated the debt and demanded full payment. The plaintiff moved to sue the debtor to recover the loan in April 2017.

You would think the defendant could argue that the six-year statute of limitations on a promissory note lapsed, so they were no longer liable to pay. However, the six-year- period started running when the plaintiff exercised the acceleration clause in 2016. Because of this, it was well within the plaintiff's right to file the suit to recover the full amount. The Supreme Court used this argument, judging the case in the plaintiff's favor.

Learn About the Effects of Tolling Statutes of Limitations

Legally, tolling pauses or delays the set time frame on a statute of limitation. This means a debtor can be charged after the statute of limitation has run. In Indiana, tolling state law applies when:

  • The debtor isn't residing in the state for some time. The debtor's time frame out of state isn't computed in the prescriptive period unless represented by someone living in Indiana who can act on their behalf.
  • The debtor is a minor
  • The debtor is Mentally incapacitated
  • The debtor files for bankruptcy

Tolling statute of limitations on debt doesn't apply when:

  • The debtor hides to delay the process.
  • The debtor hides evidence that would suffice to charge them.
  • The debtor is an appointed or elected member of public office.

Debt can put anyone in a tight and embarrassing spot, especially when the collector keeps hounding you for payment. If you are being sued for a debt and believe the statute of limitations has run its course, you can include this information in your Answer. Filing your answer doesn't have to be a tedious or frustrating process. We hope these insights give you more information on the statute of limitations in Indiana and take some of the confusion out of the legal process.

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How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.

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