Statute Of Limitations / Illinois / Debt

Illinois Statute of Limitations on Debt

Written by Ascend Team
Updated Sep 6th, 2022
The statute of limitations for debt in Illinois is 10 for written contracts (Source: 735 ILCS 5/13-206) and 5 for oral contracts (Source: 735 ILCS 5/13-205). 

Please note that general credit card agreements would be considered written contracts. Let's go through the debt specific laws regarding the statute of limitations in Illinois.

Illinois Statutes of Limitations Calculator

If your debt is within the Illinois statute of limitations, you may want to know if a debt collection judgment would lead to a wage garnishment in Illinois and how much would be garnished. 

Below is the statute of limitations and garnishments calculator to provide an estimate for you.


Debt Statute of Limitations in Illinois Laws

Written or oral debt contracts are different, so will explain how each of those work in detail below. For example, the unpaid debt in Illinois and the deadline for filing lawsuits depends upon the type of debt. 

The Illinois debt law below (Source 735 ILCS 5/13-206):

§ 13-206.  Ten year limitation.  Except as provided in Section 2-725 of the “Uniform Commercial Code”,  1 actions on bonds, promissory notes, bills of exchange, written leases, written contracts, or other evidences of indebtedness in writing and actions brought under the Illinois Wage Payment and Collection Act shall be commenced within 10 years next after the cause of action accrued;

Next, let's cover how written and oral contracts work.

Written Contracts and Open Accounts

The statute of limitations in Illinois for filing a lawsuit to collect most debts arising from a written contract is 10 years. The statute setting the deadline is 735 ILCS 5/13-206.

The Illinois law states the following:

§ 13-206.  Ten year limitation.  Except as provided in Section 2-725 of the “Uniform Commercial Code”,  1 actions on bonds, promissory notes, bills of exchange, written leases, written contracts, or other evidences of indebtedness in writing and actions brought under the Illinois Wage Payment and Collection Act shall be commenced within 10 years next after the cause of action accrued;

For Illinois, examples of these accounts may include, but are not limited to:

  • Promissory notes
  • Credit cards
  • Mortgages
  • Car loans
  • Furniture accounts
  • In-store credit cards/accounts
  • Gym memberships

Therefore, the debt might be uncollectible if you have not made a payment on the account in over four years. However, there are situations we discuss below that could “re-start” the statute of limitations on old debts.

Oral Contracts

Lenders have 5 years in Illinois to file a lawsuit for breach of an oral contract. 

An oral contract includes a promise to pay. These types of agreements can be enforced, but they are much more challenging to collect. 

First, the lender must prove that an oral contract existed wherein you promised to repay a debt. A shorter statute of limitations encourages lenders to pursue these debts while there may still be evidence the debt existed.

You can find the Illinois oral contract law below (Source 735 ILCS 5/13-205):

§ 13-205.  Five year limitation.  ...actions on unwritten contracts, expressed or implied, or on awards of arbitration, or to recover damages for an injury done to property, real or personal, or to recover the possession of personal property or damages for the detention or conversion thereof, and all civil actions not otherwise provided for, shall be commenced within 5 years next after the cause of action accrued.

Judgments

A creditor or debt collector may file a debt collection lawsuit to receive a judgment. A judgment is a court order stating that you owe a debt. It gives the holder additional legal remedies to collect the debt, such as seizing assets and wage garnishment in Illinois.

The statute of limitations for a judgment in Illinois is 7 years. 

However, the creditor could ask the court to renew the judgment. If so, the deadline to collect a judgment could be longer than 7 years. Therefore, the creditor could try to collect on the judgment if you receive money or assets that are not exempt from collection or your income increases.

You can find the Illinois judgement law below (Source 735 ILCS 5/12-108):

“no judgment shall be enforced after the expiration of seven years from the time the same is rendered...”

Can You Be Sued for Debt in Illinois if the Debt Is Beyond Statute of Limitations?

A creditor could file a lawsuit on an old debt even though the statute of limitations has expired. It is up to you to file an answer to the lawsuit alleging the statute of limitations has expired. You must also appear in court to argue the defense to the judge.

However, it is illegal for debt collectors to threaten to file or file lawsuits on time-barred debts under the Fair Debt Collections Practice Act (FDCPA). However, the Rosenthal Fair Debt Collection Practices Act covers more types of collectors and provides additional protections for California residents.

Under the Rosenthal Act, “debt collector” refers to original creditors, collection agencies, and other parties who collect consumer debts in the regular course of business. The Rosenthal Act applies to consumer credit transactions only. However, it expands protections for consumers.

For example, debt collectors (including original creditors) must tell you if the statute of limitations has expired. It has to include this notice in the first communication sent to you after the deadline passes. (CIV §1788.14) Furthermore, collectors cannot file a lawsuit for a time-barred debt. (CCP §337d)

If you believe a creditor has violated debt collection laws, you can file a complaint with the Illinois Attorney General's Office. You can also file a complaint with the Federal Trade Commission or the Consumer Financial Protection Bureau. In addition, you might be able to file a lawsuit against the collector for damages.

    Important Note!   

Laws regarding statutes of limitations for debts are complicated and can be confusing. The specific facts and circumstances of your case determine the law that applies to a specific debt. For example, the contract or documents you signed to obtain the debt could make the debt subject to laws in another state. An experienced lawyer analyzes the facts of your case and applies the applicable laws to determine your legal rights and options for dealing with old debt.

What Happens if a Debt Collector Is Calling Me to Collect Debt Beyond Statute of Limitations?

Technically, you still owe the debt. Statutes of limitations only set deadlines for filing lawsuits. They do not erase the debt you owe unless there is a specific law in Illinois that eliminates your legal liability for a debt.

Therefore, unless the expiration of the statute of limitations terminates the debt, the debt collector can continue to contact you and ask you to pay the debt. In this case, it is crucial you do not do anything that could extend or waive the statute of limitations for a debt.

Actions that could waive or restate the statute of limitations could include:

  • Acknowledging that you owe the debt
  • Accepting a settlement offer
  • Making a payment on the debt
  • Entering a payment plan
  • Making a new charge on the same account
  • Accepting a disbursement or cash advance
  • Agreeing to pay off some of the debt

Warning!  Be very careful when you talk to a debt collector or creditor about your debt.

They might try to get you to say something or take an action that could restart the statute of limitations in Illinois. If you cannot repay the debt, it could be best to avoid talking to the debt collector or creditor without first speaking with a bankruptcy lawyer or debt collection lawsuit attorney. An attorney advises you about your legal rights and options for dealing with time-barred and old debts.

Are Old or Time-Barred Debts Still On My Credit Report?

Typically, negative information remains on your credit report for seven years from the delinquency date. A bankruptcy filing stays on the account for seven to ten years. After the time limit expires for a debt, it should drop off your credit report.

You can dispute errors on your credit report. The CFPB provides detailed information on its website about disputing errors on credit reports, including a sample letter. You can also access information for disputing errors from the Federal Trade Commission, including links to the three credit reporting agencies and sample letters and dispute forms.

What Should I Do About Old Debts That I Cannot Pay?

You can deal with old debts in several ways.

Pay Off the Debt

 First, you may pay off the debt in full, if possible. However, if the statute of limitations has expired, you might not be legally liable for the debt. You may look to talk with a lawyer before in a free consultation paying an old debt in full.

If you do not intend to pay the debt, you might want to avoid speaking with the creditor or debt collector. You could do or say something that could restart the statute of limitations. However, you SHOULD NOT ignore a debt collection lawsuit. Talk with a bankruptcy lawyer immediately if you receive a lawsuit. Remember, paying a partial payment or acknowledging the debt could restart the statute of limitations.

Illinois Debt Relief

Other options to resolve old debt include Illinois debt relief and debt management. Debt settlement could work if you have a large sum of money to negotiate lump sum payments for your debts. However, when the creditor “writes off” the remaining debt, it could cause you to owe income taxes for that year. The written-off debt remains on your credit report, which could negatively impact your credit score. Debt management companies can be deceiving. They offer to help you get rid of debts, but they often charge high fees, and your creditors do not have to work with them.

Debt Payoff Planning

You might want to explore debt payoff planning if you have disposable income. Our Savvy debt payoff planner can help you prioritize your debts to pay them off quickly to save interest and get out of debt faster.

Filing Bankruptcy 

Filing bankruptcy in Illinois is an option that can help eliminate unsecured debt. The two most common bankruptcies are the Chapter 7 bankruptcy in Illinois and the Chapter 13 bankruptcy in Illinois

When you do not have any money left over each month to pay your debts after paying your living expenses, you might consider filing for Chapter 7 bankruptcy. A Chapter 7 bankruptcy case can eliminate unsecured debts as soon as four to six months after filing. Use our free Illinois Chapter 7 calculator to see if you qualify to file Chapter 7. Please note that you generally have to qualify for the Chapter 7 bankruptcy using the Illinois bankruptcy means test. Also, the total cost to file bankruptcy in Illinois is $338 for a Chapter 7 bankruptcy and $313 for a Chapter 13 bankruptcy, not including attorney fees.

If you can afford to pay some of your debts or need help keeping your home or car (potentially because your equity exceeds the Illinois bankruptcy exemptions), a Chapter 13 bankruptcy might be the best way to resolve your debt problem. Through a court-monitored repayment plan, you can reorganize your debts into an affordable monthly payment to get rid of debts in as little as three to five years. A Chapter 13 bankruptcy can also prevent foreclosure and repossession. Try our free Illinois Chapter 13 calculator to estimate your payment for a Chapter 13 plan.

Summary

There are specific statute of limitations in Illinois on debt, specifically written or oral agreements. Hopefully this article helped you understand how each of them work, the timeframe for the debt, and options you can pursue if your debt is within statute of limitations, but you cannot pay. Take the free debt statutes and wage garnishment calculator below for an estimate for you.