Written Contracts

• Ohio has one of the longest statutes of limitations on written contracts in the country. Other than Kentucky and Rhode Island, no other state has a statute of limitations on written contracts that is equal to or greater than 15 years. At the opposite end of the spectrum are states such as Delaware and Maryland, which have statutes of limitations as low as three years---the lowest in the country for written contracts.
  
  

Oral Contracts

• Compared to other states, the Ohio statute of limitations---six years---on oral agreements is only moderately high. It is double the statute of limitations mandated by states such as Kansas, Mississippi and New Hampshire, but less than the statute of limitations mandated by states such as Louisiana and South Carolina. Twenty-eight states and Washington, D.C., have shorter statutes of limitations on oral agreements than Ohio. At two years, California has the lowest statute of limitations in the country.
  
  

Challenges

• It is more challenging to prove the existence of an oral contract than it is to prove the existence on a written contract in a bad debt lawsuit. However, written correspondence from a borrower promising to repay an oral contract or proof of payment history offer sufficient evidence that an oral contract is in existence. The burden of proof always lies with the party bringing charges or filing a lawsuit for the nonpayment of a delinquent debt.
  
  

Considerations

• The statute of limitations on a loan---written or oral---resets when a payment is received. It does not, however, reset when a borrower receives correspondence regarding the payment of the loan or when the loan is sold to a new collection agency. A lender can report payment history to the three major credit bureaus including missed payments and a charge-off up to seven years from the date of the last payment received on a loan.