You are probably aware that most crimes are subject to statutes of limitation. After certain time limits have been reached, a crime can no longer be prosecuted. But did you know that statutes of limitation also apply in civil cases?
Imagine a civil case ending in a money judgment. The defendant is ordered to pay the plaintiff a certain amount of money in addition to interest, fees, and legal costs. The entire monetary award is immediately payable. But what if the defendant, now known as the judgment debtor, cannot pay?
The law generally gives plaintiffs, known as judgment creditors after the fact, time and leeway to collect money judgments. But they do not have unlimited time. Money judgments expire based on a state’s statute of limitations.
Usually 7-10 Years
States are free to set their own statutes of limitation. Therefore, there is no single number that applies universally. Judgment Collectors, a Salt Lake City collection agency specializing in money judgments, says the average is 7-10 years.
Some states have statutes of limitation as short as 5 years. I don’t know of any that go beyond 10 years. Let us say your state has a 10-year statute of limitations. That means you would have a decade to collect; a decade from the date the judgment was officially recorded by the court.
Ten years seems like a lot of time on day one. But anyone who is attempting to collect a money judgment knows that time flies quickly. The combination of legal time constraints, the time it takes to locate assets, and potential delays on the debtor’s end can prolong collection efforts for years. Get bogged down dealing with a debtor who simply refuses to pay and that decade can pass very quickly.
Judgments Can Be Renewed
The good news for judgment creditors willing to remain diligent is that judgments can usually be renewed. Again, renewal times are subject to state law. Some states allow endless renewals subject to the same statutes of limitation. Others stick with the same time limits but allow only a single renewal. Still others limit both renewal times and the number of renewals allowed.
It is in a creditor’s best interests to understand his state’s statute of limitation and renewal regulations before collection efforts begin. The knowledge is crucial to developing a long-term strategy in the event the debtor delays for a prolonged amount of time.
When to File for Renewal
Regardless of renewal terms and the number of times a creditor can renew, Judgment Collectors say the one thing common in all states is the timeframe for renewing a judgment. Creditors must file for renewal before the judgment expires. A month ahead of time is usually sufficient.
Waiting until after a judgment expires nullifies the opportunity to renew. It is too late if the expiration date has passed. By filing ahead of time, a judgment creditor virtually guarantees renewal and the opportunity to continue collection efforts.
It should also be noted that even if a court doesn’t get around to holding a hearing until after the judgment expires, a judgment can still be renewed as long as the filing occurred prior to expiration. Renewal is subject only to when the motion was filed, not to when the court actually holds a hearing.
Statutes of limitation impact civil cases and money judgments. If you are looking to file suit or you have already won a money judgment, learn what the statute of limitations is in your state. You’re going to need to know the information should your debtor fail to pay in a timely manner.
