What is the Statute of Limitations for LLC Debts in California?
California does not establish a separate statute of limitations for LLC debts. The applicable deadline depends on debt type under California's general statutes of limitations: written contracts have a 4-year limit (Cal. Code Civ. Proc. § 337), oral contracts have 2 years (§ 339), and open accounts have 4 years (§ 337). The clock starts when the debt becomes due or the breach occurs.
Debt Classification Determines the Deadline
Written Contracts. Promissory notes, loan agreements, and signed invoices trigger a four-year statute of limitations under Cal. Code Civ. Proc. § 337(1). This is the longest standard period and applies to most formal business debt.
Oral Contracts. Verbal payment agreements have a two-year deadline under Cal. Code Civ. Proc. § 339(1). Creditors must file suit within this shorter window or lose the right to collect.
Open Book Accounts. Vendor invoices, trade credit, and running account balances have a four-year limit under Cal. Code Civ. Proc. § 337(2).
Judgments. Once a creditor obtains a judgment against your LLC, the judgment is enforceable for 10 years and may be renewed.
LLC Structure Does Not Alter Deadlines
Your LLC's liability structure does not change these timeframes. California's charging order statute (Cal. Corp. Code § 17705.03) limits how creditors can pursue member assets but does not extend or shorten debt collection deadlines. Creditors must file suit against the LLC entity itself within the applicable period.
When the Clock Starts
The statute of limitations begins running when the debt becomes due—typically the payment date specified in the contract, not the date the contract was signed. For open accounts, the clock may restart with each transaction or payment, depending on the account terms.
Affirmative Defense Required
Once the statute of limitations expires, the debt becomes time-barred. However, your LLC must affirmatively raise this defense in court. Creditors may still attempt collection, but courts will dismiss time-barred claims if you assert the statute of limitations as a defense.
Practical Steps
Document all debt agreements in writing to secure the longer four-year deadline. If a creditor is pursuing collection, consult a California business attorney immediately to verify the applicable deadline and determine whether the claim is time-barred.
This is general information, not legal advice.