In the State of Pennsylvania, the statute of limitations on contracts is four years. Most collection cases involve a contract of one type or another. What a four year statute means is the statute begins to run when a creditor knew or had reason to know that there has been a breach. From that point forward, the creditor has four years to initiate a lawsuit.
However, should a payment of the debt take place within that four year time period, that can “toll” or extend the statute of limitations from the time of last payment for an additional four year time frame. Oftentimes, a debtor will make a payment or two at the beginning and then stop paying. The statute in such an instance would not be when the contract was created or when goods or services were delivered, but rather the statute would begin to run when the last payment was made from the debtor to the creditor.