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.