Breach Start

• The clock begins ticking on debts in California the first time the debtor misses a scheduled payment to the creditor. California law calls this the "date of breach," meaning the time the debtor first violated terms of an agreement with their creditor. Making a payment restarts the time period in which creditors can sue for repayment of the debt. In this way, a debtor who defaults on payments but then restarts their monthly payments again prolongs the time in which a creditor can use the courts to collect unpaid debts.
  
  

Types of Debt

• In California, only two types of debt are governed by statute of limitations legislation: written and oral agreements, excluding child support payments, student loans, fines and unpaid taxes. Car loans have a six-year statute of limitations, while a court judgment on the payment of debt carries a 20-year statute of limitations.
  
  

Debtor's Rights in California

• In California, the Fair Debt Collection Practices Act protects debtors from certain behaviors by creditors, regardless of the statute of limitations. For instance, creditors may only call debtors between 8 a.m. and 9 p.m. and can be charged with harassment if they do not comply. The creditor must notify the debtor if they have referred the debt to a collection agency.
  
  

Judgment Proof

• Creditors can still attempt to collect debts even after the debt's statute of limitations is expended. In these cases, they usually use a collection agency. Debtors who cannot meet their obligations due to poverty or unemployment are allowed to appeal to the court to make them "judgment proof." This allows the judge to certify that the debtor does not have enough assets or income to repay debts at that time. This gives a debtor a respite from the credit agency's calls until finances improve.
  
  

Considerations

• The California statute of limitations on debt only protects certain types of debt, and it only protects debtors from lawsuits. It does not prevent a creditor from using a collection agency. Unpaid debts always negatively impact credit scores, so it is not advisable to "wait out" debts or ignore creditors until a debt's statute of limitations has passed.