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Statute of Limitations on Debt Collection in Alabama

Melissa Lyken | November 16, 2022

Know Alabama laws to beat debt collectors in court.

Summary: The statute of limitations on debt in Alabama vary depending on the type of debt. That being said, the Alabama statute of limitations on credit card debt is three years. This means that creditors and debt collectors only have three years to sue you for a credit card debt in Alabama, starting from the date of the last action on the account. Use SoloSuit to stand up for your rights and use the Alabama statute of limitations laws to win your debt lawsuit.

Do you have an old unpaid debt in Alabama? Your creditor may be able to file a collection suit against you for breach of contract. If you recently received a demand letter from your creditor, make sure you know where you and your possible defenses stand before making any payments or promises. One important defense to be aware of is the statute of limitations on debt.

The statute of limitations refers to the length of time a creditor or debt collector can demand and collect payment from you. After the statute of limitations has lapsed, your creditor can no longer file any collection lawsuit against you. They can also no longer use any other judicial method to pursue and collect what you owe them.

See below for more information about the statute of limitations for debt collection in Alabama.

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Statute of limitations on debt in Alabama

The statute of limitations on debt in Alabama depends on the kind of debt. There are only two categories of debt in Alabama that are enforceable: debts based on contracts and accounts. The statute of limitations is thus different depending on the kind of contract or account that you owe.

According to AL Code §6-2-37 (2021),

“The following must be commenced within three years:
(1) Actions to recover money due by open or unliquidated account, the time to be computed from the date of the last item of the account or from the time when, by contract or usage, the account is due;”

In other words, creditors and collectors must take you to court for any debt based on an open account within three years of the last action on the account. This means that the Alabama statute of limitations on credit card debt is three years.

Likewise, AL Code §6-2-36 (2021) states:

“Within four years, all actions or motions against any surety to any writ of error, appeal, replevy, or forthcoming bond executed in any case in any of the courts of the United States or of any other state or country except this state must be commenced.”

This means that creditors and collectors only have four years to sue you for a breach of contract debt.

AL Code §6-2-34(4-5)(2021),

“The following must be commenced within six years:
(4) Actions founded on promises in writing not under seal;
(5) Actions for the recovery of money upon a loan, upon stated or liquidated account or for arrears of rent due upon a parol demise;”

And finally, AL Code §6-2-33 (2021) states:

“The following actions must be commenced within 10 years:
(1) Actions founded upon any contract or writing under seal.”

These two laws are perhaps the most important statutes on debt in Alabama. In simple terms, creditors and collectors only have six years to sue for debts with a written, unsealed contract and any debts related to rent. On the other hand, they have 10 years to sue for debts in writing under seal.

The debt may either be based on a written or oral contract, an open account, promissory note, mortgage, or any other form of loan. Moreover, if your creditor obtains a favorable judgment, the judgment has its statute of limitations. Keep reading for the various statute of limitations for debt in Alabama.

The AL statute of limitations on different kinds of debt explained

The following table outlines the statute of limitations on different types of debt in Alabama. Below, we explain each statute in more detail.

Statute of Limitations on Debt in Alabama

Debt Type Deadline in Years
Credit card 3
Open account 3
State tax 3
Breach of contract 4
Written contract, unsealed 6
Oral contract 6
Rent 6
Written contract, sealed 10
Judgment 10-20

Sealed Contracts – 10 years

When your debt is based on a contract under seal, your creditor has ten years to file a collection lawsuit against you.

A sealed contract is a formal written agreement that states each party's promises and is not required to have a consideration. It must be signed by both parties, have a seal, and be delivered to both parties. After all three requirements are complete, the sealed contract is officially a conclusive document between the parties.

Written Contracts – 6 years

Promises in writing not under seal or comprising a simple contract have a six-year prescriptive period. Your creditor must file a collection lawsuit to collect your debt within six years from the time you defaulted. Otherwise, your debt will be time-barred.

Unlike a sealed contract, to be valid, a written contract must have stated a valuable consideration. It does not have to bear a seal. It is valid and enforceable when both parties have signed the contract. An example of a written contract could be medical debts, lease contracts, or any other agreement made in writing and signed by both parties.

Oral Contract – 6 years

An oral contract or verbal agreement between the parties is legally binding and has a statute of limitation of six years.

Recovery of Money from a Stated or Liquidated Loan Account – 6 years

If your debt arises from a loan such as a personal loan or a stated account, your creditor is granted a six-year statute of limitations.

Open and Unliquidated Account – 3 years

If your debt is an open account, such as an unpaid outstanding balance on your credit card, your creditor or the debt collector may file a collection lawsuit against you within three years from the time you defaulted on paying your balance.

Breach of Contract of Sale – 1- 4 years

In Alabama, the default prescriptive period for a breach of contract of sales is four years. This period may be reduced to no less than one year and no more than four years if agreed by the parties. Debts from auto loans also fall under this category.

State Tax Debt – 3 years

The state has three years to audit your tax return and access any additional tax, penalty, or due interest from the date a tax return is filed or due, whichever comes later. After the said three-year period, the state can no longer pursue you for any tax deficiencies.

Judgments – 10 - 20 years

A judgment on debt may be enforced within ten years after entry. However, suppose the judgment will not be successfully satisfied within the ten years. In that case, the judgment creditor may file for the revival of the judgment before the ten-year period ends and have it enforced for the next successive ten years. Therefore, a judgment in Alabama may be enforced for 20 years.

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Use the statute of limitations as a defense

Another important principle to note when considering the statute of limitations deadline is whether the debtor or defendant is in Alabama. The period in the statute of limitations will only begin when the defendant is present in Alabama. The time may also be interrupted by the defendant's subsequent absence. The time that they were not in the state will not be included when calculating the period of the permissible time for filing a collection lawsuit.

If your debt passes the period given in the statute of limitations, and your creditor did not file a collection lawsuit, they are barred from pursuing a legal remedy to collect. You still owe the creditor, but they can no longer ask the court to garnish your wages or levy your property to satisfy your debt.

The exception to this is when you make a partial payment or an unconditional promise in writing signed by both parties, as this action will result in the statute of limitations restarting. As such, your creditor may be able to file a collection lawsuit and pursue the collection of your debt via another legal remedy.

Understanding all of the laws regarding statutes of limitations on debt can be burdensome. However, you must be familiar with the statute of limitations if you seek to provide this defense against your creditor or debt collector. If the statute of limitations has not expired on your debt, you should consider other defenses that may apply to your case.

Respond to a debt lawsuit in Alabama

You can save yourself the time, money, and stress of finding a lawyer when you represent yourself in your Alabama debt collection case. Here’s how.

If you’ve been sued for debt in Alabama, the first step to beating your opponent in court is to respond to the lawsuit with a written Answer. SoloSuit can help you draft and file your own, customized Answer in a matter of minutes online.

Follow these three steps while drafting your Answer:

  1. Respond to each claim listed in the Complaint.
  2. Assert your affirmative defenses.
  3. File the Answer in court, and send a copy to the opposing attorney.

If you know that your debt is past the statute of limitations in Alabama, list this information as one of your affirmative defenses. This will likely lead to the case being dismissed.

Draft and file your Answer in all 50 states with SoloSuit.

To learn more about these three steps, check out this video:

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