Is there a statute of limitations on student loan debt? – Fox Business

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If you’ve defaulted on student loans, it’s important to understand the student loan statute of limitations to avoid potential legal issues. (iStock)
Most creditors and debt collectors have a limited window for filing a lawsuit to collect a debt. This window is known as the statute of limitations.
Knowing the statute of limitations that applies to your debt is important if you've defaulted on your federal or private student loans. This article will cover whether there’s a statute of limitations on student loans, how long it lasts, and what it means for you.    
With Credible, you can compare student loan refinance rates from multiple lenders in minutes.
Most statutes of limitations range from three to six years, but this can vary by state law, the type of debt you have, and the terms of your credit agreement, according to the Consumer Financial Protection Bureau (CFPB).
Unfortunately for struggling student loan borrowers, there’s no statute of limitations period for federal student loans. No matter how long your federal student loans have been in default, the federal government can pursue collection by wage garnishment or seizing tax refunds or other government benefits. But the garnishment can’t exceed 15% of your disposable wages.
Most states have different statutes of limitations based on the type of debt you owe. There are generally four types of debt:
A state may have different statutes of limitation for credit cards, oral agreements, written agreements, and promissory notes, and the timelines for each type of debt vary by state. In most states, the statute of limitations for promissory loans (which covers most private student loans) is six years, but can be as short as three years or as long as 10 years. 
Once the statute of limitations has passed, the debt is considered "time-barred," and the creditor can’t sue you or threaten to sue you.
The statute of limitations usually starts when you miss a payment on a debt, although it can also start when you made your most recent payment or partial payment. The official start date varies by state law as well. 
For example, say the statute of limitations on private student loans in your state is six years and starts on the date you miss a payment. If you missed your payment on Jan. 1, 2021, your statute of limitations would run through Dec. 31, 2027.
Check with your state’s attorney general’s office or a lawyer familiar with your state’s debt collection laws to learn about the laws that apply to your situation.
In some states, the statute of limitations can be restarted quite easily. For example, if your state starts the clock on the date of your last payment, then making a partial payment — even after your loan is in default — can restart the clock. Some states also restart the clock on the statute of limitations if you acknowledge the debt in writing.
Credible lets you compare student loan refinance rates without affecting your credit score.
If your debt is outside of the statute of limitations, this doesn’t mean you no longer owe the money. It just means that the lender has fewer collection options and can no longer sue you to collect the balance.
Lenders can still try to collect the debt by calling you and sending letters, as long as they don’t violate the Fair Debt Collection Practices Act.
If a creditor or debt collector sues you after the statute of limitations has expired, don’t ignore it. A court may still award a judgment against you if you don’t raise the statute of limitations as a defense, according to the CFPB. For that reason, it’s a good idea to discuss your situation with a lawyer familiar with debt collection laws in your state.
Settling your student loan debt involves negotiating with the lender and getting it to agree to accept less than the full amount owed as final payment on your debt.
That might sound appealing — especially if you can’t pay off your debt in full. But there are some downsides, such as:
If you decide to negotiate a settlement with the creditor, get the creditor’s agreement in writing before making your payment. Otherwise, you could end up restarting the statute of limitations on your debt, only to find out that the creditor doesn’t plan to live up to their end of the agreement.
Waiting out the statute of limitations isn’t the only — or even the best — way to deal with student loan debt. If you’re having trouble making payments or are already in default, consider these options:
If you’re ready to refinance, you can use Credible to easily compare student loan refinance rates.
Quotes displayed in real-time or delayed by at least 15 minutes. Market data provided by Factset. Powered and implemented by FactSet Digital SolutionsLegal Statement. Mutual Fund and ETF data provided by Refinitiv Lipper.
This material may not be published, broadcast, rewritten, or redistributed. ©2022 FOX News Network, LLC. All rights reserved. FAQNew Privacy Policy

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