How long can a creditor collect on a bad auto loan?

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How long can a creditor collect on a bad auto loan?

Asked on March 12, 2012 under Bankruptcy Law, Wisconsin

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

It would be either 6 years or 10 years. In your state, the statute of limitations, or time to enforce a debt or obligation, on a written contract is 6 years--so an auto loan which was evidenced by a written contract is one which the creditor has up to 6 years to take action on. However, if there was not just a written loan agreement but also a promissory note, then the creditor would have up to 10 years, I believe.

Note that the time to bring a legal action to collect on the debt is not measured from when the loan was taken out--it's measured from when the borrower first defaulted, or failed to pay as per the terms of the loan. So say a loan was for 7 years, and the borrower defaulted in the 3rd year, and there was no promissory note, just a loan agreement--the lender has up to 6 years from that 3rd-year default, or up to 9 years in this case from when the loan was taken out, to take action.


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