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Statute of Limitations on Credit Card Debt

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The statute of limitation on credit card debt varies by state, but generally falls between three to ten years.

How the Statute of Limitations on Credit Card Debts Works

When a debtor stops making payment on a credit card, the creditor and collector have a specific number of years in which they can sue the debtor for non-payment. The exact number of years is determined by the individual state and every credit card owner should know the statute of limitations for their state.

Debts that are not resolved within the limit of the statute are considered time-barred debts. Time-barred debts are old and unpaid and beyond court judgments, meaning that even though debt collectors are able to try to collect an unpaid debt, they are unable to sue for the debt.

If sued, it is up to the debtor to prove the debt is beyond the statute of limitations, not the debt collector.

Federal Law Regarding the Stature of Limitations on Credit Card Debt

Federal law says that legal action can be filed on unpaid debts in the jurisdiction where the consumer lived when they signed the contract or opened the account, though it largely depends on the fine print in credit card agreements. Some agreements stipulate the terms and conditions of the account will be governed by the laws of the issuer’s state, not the debtors.

When Does the Statute of Limitations Begin?

This also depends on the state but generally, the statute of limitations begins when the account becomes delinquent, whether that is the date of missed payment, or six months after the last payment.

If a debtor makes a payment on the delinquent debt, the statute of limitations will start all over. Also, acknowledging a debt can set the clock back to start.

The Fair Debt Collection Practices Act

When a third party collector contacts a debtor about a delinquent account, they are obligated by law to explain

  • The exact amount of the debt
  • Who the debt is with
  • That the debtor has 30 days to dispute the validity of the debt
  • That the debtor can request the collector to verify the debt

This law also limits how aggressively a third party collector can go after a debtor, though it does not include in-house debt collectors. In house collections are generally used when a debtor is late on a car or home payment, or late on a loan.

In order to prevent re-activating a debt that has entered the statute of limitations, it is recommended a debtor never acknowledge a debt over the phone, but to instead request verification while the debtor researches the debt and their obligation to pay.

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