What is the time period for creditor to collect a debt in Minnesota?
This question can also be phrased as “how long is the statute of limitations to collect a debt in Minnesota?”
The answer is long and complicated, and will be answered in full below.
The short answer is that creditors have a very long time to collect debts in Minnesota.
- The time period for creditor to collect a debt in Minnesota can be as long as 26 years
The exact amount of time they have to collect a debt depends on many things.
- What has happened with the debt over time
- How energetic the creditor has been in trying to collect the debt
The time limits also depend on two factors:
- If the creditor doesn’t have a judgment against you
- If the creditor does have a judgment against you
If the creditor doesn’t have a judgment against you
If the creditor doesn’t have a judgment against you then:
- A creditor has six years to get a judgment for an unpaid debt in Minnesota
This seems simple enough, but debtors and creditors often do business for a long period of time, often longer than six years.
So the question becomes “six years from when?”
- Six years from the last payment on the debt or its acknowledgment
What is an acknowledgement?
An acknowledgement can be something as simple as the borrower asking the creditor on the phone for longer to pay the debt. (Bottum v. Jundt (Minn Ct. App. 2009)).
If a creditor does not have a judgment within six years of the last payment or acknowledgment, then they can no longer get a judgment against you.
They can still, however, make phone calls or write letters saying that you owe them money.
- If you make a payment after one of these calls, then the six years starts again
If you do not appear in court and tell the judge that it has been six years since you paid or acknowledged the debt, then the court will enter a judgment against you even though the statute of limitations has passed.
- The statute of limitations is called an affirmative defense, which means that the defendant must affirmatively take action and prove that it has been 6 years
This is often very difficult because you need at least 6 years of bank statements, letters, and phone logs.
- Without a judgment, the creditor cannot levy your bank accounts or garnish your wages
- Until a creditor gets a judgment, the only thing the creditor can do is contact you and ask for payment
- Creditors often try to restart the statute of limitations by accepting small payments when it is about to end
If the creditor does have a judgement against you
Assuming the creditor gets the judgment within the first statute of limitations, then the creditor has 10 years from when they get a judgment to collect the money. (Minnesota Statutes 550.01, Enforcement of Judgments).
A judgment can also be renewed for another ten years. (Minnesota Statutes 548.09).
- Therefore the statute of limitations for debt collection in Minnesota is at least 26 years
It could be even longer if you have made any payments on the debt at all.
You can’t rely on the statute of limitations
This is one reason why you can’t rely on the statute of limitations to protect you from your old debts, or debts that were incorrectly put in your name.
Perhaps (un)surprisingly, it is often faster and cheaper to file for bankruptcy in Minnesota than to try and wait for the statute of limitations to run out on a debt in Minnesota.
- A bankruptcy works to discharge a debt even if the creditor has already gotten a judgment for the debt
- The bankruptcy voids the judgment and prevents the creditor from using the judgment to garnish your wages or levy your bank accounts as soon as the bankruptcy is filed
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