How Long Before a Debt Becomes Uncollectible?


Skilled lawyers answer various questions like, “How long before a debt becomes uncollectible?” Contact Bournakis & Mitchell, P.C. for answers, info, and more.

When Does a Debt Become Uncollectible Under Georgia Law?

If you have an old outstanding debt, you might be wondering if you still have to pay the debt or whether your obligation is affected by the passage of time. 

Under Georgia law, a debtor and creditor relationship exists where one person is bound by contract or by law to pay another an amount of money. It doesn’t matter if the exact amount to be paid is uncertain. As long as the obligation exists, the debtor remains liable to fulfill the debt even if the time stipulated in the contract for repayment has elapsed. On the other hand, the creditor has the right to take legal action against the debtor to ensure that the debt is repaid.

However, under the statutes of limitations on debt collection, the creditor’s right to enforce payment is limited by time. So they must act quickly if they ever intend to recover the debt due. Failing to take action within the stipulated time period could render the debt in question uncollectible, as the creditor’s right would have become invalid.

The specific time frame within which a debt would become uncollectible depends on the type of debt and the state laws on the issue. Below we discuss some of the limitation periods for certain kinds of debt after which they would become uncollectible, what to do if you’re sued for an uncollectible debt and how an attorney might help in such circumstances.

How Does Debt Collection Work?

Debt collection involves pursuing payments on debts owed by individuals or businesses. Some creditors may employ professional debt collectors to do the job, while others may prefer to work on their own. Regardless of who does the actual debt collection, the creditor or their agent is required to act within the boundaries of the law.

The first step in the debt collection process is typically sending a written notice/formal payment request to the debtor for failing to abide by the agreement. If there’s no response from the debtor, the next step is often to contact the debtor by phone. If phone calls are unsuccessful, a debt collector’s next step is filing a lawsuit.

If you are sued for a time-barred debt, the suit against you will likely be unsuccessful. But it is important to first determine if the statute of limitations for the said debt has passed, as that would also determine your next course of action.

Limitation Period For Debt Collection in Georgia

The amount of time it will take for your old debt to become uncollectible is not a matter of assumption but depends on the state law governing the type of debt. For debts that are collectible in Georgia, the Georgia Code has established several limitations periods depending on the nature of the transaction/debt as follows:

Written Contracts

The Georgia Code requires that all debt collection actions based on written contracts be commenced within six years of the defaulting party.

For example, a credit card debt is usually based on an agreement to make regular payments to the credit card company, so if you default, the company has six years to enforce its rights and take legal action against you. In the same vein, a medical debt based on a written agreement with the medical service provider is also collectible within six years.

Unwritten Contracts (Express or Implied)

Debts that arose under unwritten contracts and all other contracts not expressly mentioned in the Georgia Code shall be collected within four years after the debtor defaults.


Negotiable Instruments

The general limitations period for debts arising under negotiable instruments such as a promissory note is six years. However, if the debtor on the note fails to pay both the principal and interest within the required time and if no demand for payment is made, the debt becomes time-barred after ten years.


Bonds and Other Sealed Instruments

A debt due under a bond or any other sealed instrument is collectible within 20 years, after which the creditor’s right becomes forfeit.

Can You Extend the Limitation Period for a Delinquent Debt?

Certain actions you take may reset the clock and reactivate the creditor’s rights to collect the debt if you have an old debt for which the statute of limitations has elapsed.

For instance, if you make a partial payment on the debt after a long time of default, the time would continue to count from the date on which you made the last payment.

Also, if you make a new credit agreement acknowledging the old debt shortly before or after the initial time has passed, that could modify the time limit for the previous contract, and time would only start to count if you default on the new payment. Such circumstances could arise when you enter a new agreement for installment payment with your creditor. Before executing such agreements, it is better to consult an attorney to ensure the new agreement is to your benefit.

Can Bankruptcy Render a Debt Uncollectible?

Besides the statute of limitations on debt, bankruptcy law also affects a creditor’s debt collection rights. Once the bankruptcy proceedings begin, all creditors are required by law to stop all debt collection activities. If the debt in question is discharged during the proceedings, the discharge extinguishes the creditor’s collection rights, and the debt becomes uncollectible.

What to Do if You Get Sued for an Uncollectible Debt


If a creditor sues you for an uncollectible or time-barred debt, you will receive a summons from the court, notifying you about the case, the location of the court where the case is being held, and when you’ll need to appear to defend yourself.

If you’re aware that the debt has become statute-barred, you might be tempted to ignore the court summons. However, that approach might be detrimental. The judge may enter a default judgment against you if you fail to show up. Based on the judgment, the creditor can then take steps to enforce the judgment and collect the money you owe through processes such as wage garnishment or property liens.

Instead of ignoring the summons, a better and safer approach would be to go to court when the case comes up and inform the judge that the debt has become uncollectible by law. You can get a lawyer to represent you with this. After assessing your claim, the judge would make a pronouncement on the matter, which would officially end the creditor’s claim against you.

How an Attorney Can Help

If a debt collector has instituted a lawsuit against you for an old unpaid debt, it is important that you consult an attorney to understand your options. Your attorney can assess the facts and help you determine whether the statute of limitations on debt can work in your favor. They can also represent you in court regardless of whether the debt is time-barred and work to ensure that the outcome of your case is not detrimental to you.

Please remember that even if you have uncollectible time-barred debt, it can still show up on your credit report so it’s important to take care of it sooner rather than later. There are a few options available for you legally that could help you live a debt-free life. You can contact an attorney to guide you as you explore them.

For further questions on uncollectible debts, bankruptcy, or debt relief, contact us at the law firm of  Bournakis & Mitchell, P.C. Our goal is to help as many Americans as possible live free from debt and creditor harassment, and so we are committed to helping people like you, resolve their indebtedness with our legal knowledge and experience. Contact us today for answers and help with resolving your outstanding debts.

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