Account Types

• The law recognizes three types of debts: contracts, promissory notes and open-ended accounts. Contract agreements can either be written or oral. Verbal contracts are legally binding but tough to prove in court. Promissory notes and written contracts are similar except promissory notes indicate the scheduled repayment plan and interest paid. For example, a credit card agreement would be a written contract and a mortgage would be a type of promissory note.
  
  

Beginning of Statue of Limitation

• The statue of limitations begin on the date a payment was due. When payments are not received according to the repayment terms, the creditor can start a cause of action against the debtor.
  
  

Statue of Limitations

• In Minnesota, a person has up to six years to sue for an oral debt. Written contracts and promissory notes have a six-year limitation. Open-ended account debts are considered stale after six years of inactivity.