Statute of Limitations on Debt Lawsuits in New York

If you heard of the term "Statute of Limitations" (SOL), you may be wondering how it may effect a creditors ability to collect a debt.

The SOL in New York for a breach of contract claim is 6 years (subject to tolling and other events that may extend the SOL) . Lawsuits to collect on debts for credit cards and student loans are usually based on breach of a contract or a promissory note.

However, New York's borrowing statute under CPLR 202 allows a Statute of Limitations defense on whichever SOL is shorter (New York vs. the state of the original creditor).

For example, Delaware has a 3-year SOL for breach of contract. As such, a lawsuit brought by a Delaware based bank may be subject to an Statute of Limitations defense in New York if brought after 3-years.

An example of how the Statute of Limitations can be extended is when a debtor makes a payment on a past-due debt. The payment may act to extend the SOL for another 6 years from the date of that payment. That is one of the reasons why a debtor must be very careful when agreeing to making any payment to debt collectors, even if it is a small one-time payment.

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