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Indiana Statute of Limitations on Debt

Melissa Lyken | November 02, 2022

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

Summary: Indiana protects consumers against debt collectors bringing up old debts. The statute of limitations on credit card debt in Indiana is six years. That being said, different types of debt have unique statute of limitations laws in Indiana. Use SoloSuit to respond to a debt lawsuit and bring up the expired statute of limitations as a defense.

The statute of limitations in Indiana prevents creditors and debt collectors from suing people for super old debts. The statute of limitations is a law that sets a deadline for creditors and debt collectors to sue someone over a debt. Depending on the kind of debt you owe, this period varies anywhere from two to twenty years.

So, if a creditor or collector doesn't file a lawsuit against a debtor during the prescriptive period, they lose 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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How does the statute of limitations work in Indiana?

If you owe money to a creditor or your debt was sold to a debt collection agency, there is 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.

Indiana statute of limitations on debt laws explained

According to Indiana Code, §34-11-2-7(1-2) states:

“The following actions must be commenced within six (6) years after the cause of action accrues: (1) Actions on accounts and contracts not in writing; (2) Actions for use, rents, and profits of real property.”

In other words, the Indiana statute of limitations on debt accounts with unwritten contracts and rental debt is six years. This means that the statute of limitations on credit card debt in Indiana is also six years. Therefore, a creditor or debt collector only has six years to sue you for a credit card debt in Indiana.

Similarly, §34-11-2-9 states:

“An action upon promissory notes, bills of exchange, or other written contracts for the payment of money executed after August 31, 1982, must be commenced within six (6) years after the cause of action accrues. An action upon promissory notes, bills of exchange, and other written contracts for the payment of money executed on or after September 19, 1881, and before September 1, 1982, must be commenced within ten (10) years after the cause of action accrues.”

So, any debts that have a written contract have a statute of limitations of six years in Indiana as well. However, if the debt was incurred before September 1, 1982 then the statute of limitations for written contracts and promissory notes is ten years in Indiana.

Finally, §34-11-2-11 states:

“An action upon contracts in writing other than those for the payment of money, and including all mortgages other than chattel mortgages, deeds of trust, judgments of courts of record, and for the recovery of the possession of real estate, must be commenced within ten (10) years after the cause of action accrues.”

This means that any other written contracts that do not involve the payment of money have a statute of limitations of ten years. Keep reading for an even deeper explanation of Indiana statute of limitations on debt collection.

Let’s consider an example.

Example: LVNV Funding purchased Ted’s old credit card debt from his original creditor. After several attempts to contact him, LVNV Funding filed a lawsuit against Ted for the old debt. After doing some research, Ted found out that the Indiana statute of limitations on credit card debt is six years. He hadn’t made any payments on this credit card for almost seven years. Ted used SoloSuit to draft and file an Answer to the lawsuit. In his Answer document, Ted brought up the expired statute of limitations as one of his defenses. Because of this, LVNV Funding ended up dismissing the case voluntarily.

Use the statute of limitations as a defense in your debt collection lawsuit.

Indiana has unique statutes of limitations on different types of debt

Indiana has deadlines for creditors and debt collectors to follow when it comes to suing someone for a debt. The type of debt in question determines the number of years on that deadline.

Here are the different types of debt listed by Indiana law:

  1. Unwritten contracts
  2. Written contracts
  3. Medical debt
  4. Promissory notes
  5. Contract for sale of goods
  6. Auto loan debt

Below, we explain the Indiana statute of limitations on each of these types of debt in greater detail.

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. In other words, the statute of limitations on medical debt in Indiana is six years, generally.

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 on promissory notes.

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.

The table below further outlines the statute of limitations on different types of debt in Indiana:

Statute of Limitations on Debt in Indiana

Debt Type Deadline in Years
Auto loan 4
Sale of goods 4
Written contracts 4-10
Medical debt 6-10
Credit card 6
Oral contracts 6
Judgment 20

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 another 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.

Tolling can pause the clock on the 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.

Use the statute of limitations as an affirmative defense in your Answer.

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