Statute of Limitations on Debt (Time-Barred Debt)

The Regulation F definitions

Regulation F, the CFPB's rule implementing the FDCPA, defines both terms in 12 CFR 1006.26:

• Statute of limitations. "Statute of limitations means the period prescribed by applicable law for bringing a legal action against the consumer to collect a debt." (12 CFR 1006.26(a)(1))

• Time-barred debt. "Time-barred debt means a debt for which the applicable statute of limitations has expired." (12 CFR 1006.26(a)(2))

• Legal actions. "A debt collector must not bring or threaten to bring a legal action against a consumer to collect a time-barred debt. This paragraph (b) does not apply to proofs of claim filed in connection with a bankruptcy proceeding." (12 CFR 1006.26(b))

Regulation F doesn't list the time periods. It refers to the period "prescribed by applicable law," and the CFPB's consumer answer describes those periods as varying from state to state.

Scope, in the sources' words

• Who Regulation F covers. Apart from the State exemption provisions, Regulation F "applies to debt collectors, as defined in" 1006.2(i), "other than a person excluded from coverage by section 1029(a) of the Consumer Financial Protection Act of 2010" (12 CFR 1006.1(c)(1)).

• Debt collector. "any person who uses any instrumentality of interstate commerce or mail in any business the principal purpose of which is the collection of debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due, or asserted to be owed or due, to another," with inclusions and exclusions listed in the rule (12 CFR 1006.2(i)).

• Debt. An obligation of a consumer arising from a transaction that is "primarily for personal, family, or household purposes, whether or not the obligation has been reduced to judgment" (12 CFR 1006.2(h)).

• The time periods. Regulation F takes the period from "applicable law" (12 CFR 1006.26(a)(1)).

• How these definitions map to a particular account or program is a question teams often review with their own compliance team or counsel.

What the CFPB says about the time periods

The CFPB's consumer answer on older debts (Ask CFPB) describes the periods this way:

• Typical length. "Most states or jurisdictions have statutes of limitations between three and six years for debts, but some may be longer."

• What it depends on. The CFPB says the period may vary depending on the type of debt, the state where the consumer lives, and the state law named in the credit agreement.

• Exceptions. "Some debts, though, such as federal student loans don't have a statute of limitations."

• When the clock starts. "In some states, the statute of limitations period begins once a required payment is missed. In other states, the period of time counts from when the most recent payment was made, even if that payment was made during collection."

• Restarting. The CFPB adds that "making a partial payment or acknowledging you owe an old debt, even after the statute of limitations expired, may restart the time period."

Where the term appears in validation notices

The Regulation F commentary on the validation notice says that if a debt collector is collecting time-barred debt, it "may include on the front of the validation notice any time-barred debt disclosure that is specifically required by, or that provides a safe harbor under, applicable law, provided that applicable law specifies the content of the disclosure." The same comment adds that "time-barred debt disclosures may include disclosures about revival of debt collectors' right to bring a legal action to enforce the debt." (Regulation F official interpretation, comment 34(d)(3)(iv)(B)-1)