Credit Card Debt Statute Of Limitations – A Must Know For All Credit Card Holders

As a credit card holder, you need to be aware of the statute of limitations on credit card debt. According to this, the court can help a creditor collect the debts within a certain period of time.


What does credit card debt statute of limitations mean?

The credit card debt statute of limitations simply states the time period after which a creditor is not allowed to sue the debtor in a court of law. This doesn’t mean that the creditor cannot collect the debt but only means that court’s help can’t be sought to do so.

Once the period of the statute expires, the debt will then falls under a category called time-barred debts. No creditor can then sue you once your debt belongs to this group. The creditor will however try to collect its loans using other methods.

Do not ignore the court’s notice

In case your creditor sues, the court will continue legal proceedings. Only once you appear in the court of law and notify the judge about the expiry of the time window and prove that your debt is a time-barred debt, will the judge write off the case against you.

Therefore, it is up to the debtor to report to the court about the loan exceeding the statute of limitations. Statistics show that many debtors have lost cases by ignoring notices, which would have been ruled out otherwise.

Credit card debt statute of limitations vary across states

The statute of limitations on credit card debt varies from state to state. It usually ranges from three years to ten years. Oral contract, written contract, promissory note contract and open-ended accounts are the various kinds of contracts to which the statute applies and the rules might be different for different types of contract.

Be aware of the fact that if the creditor is based out of a different state from that of your residence, then that state’s statute of limitations may also apply on your account.

Usually the credit card debt statute of limitations is applicable from the time your account goes delinquent or in other words the first time you miss a payment. However, the time from your last payment is what is calculated as the statute of limitations.

Re-aging: What’s that?

There is another phenomenon called re-aging which means any new activity made will make the debt new and the clock on the statute will start ticking from this day onwards, which means the clock is reset. Even as much as acknowledging the debt can be considered as new activity.

A new activity leads to the debt being more collectable. Please note that the statute of limitations has nothing to do with the period for which the debt will be reflected on your credit report. If a creditor wins against you, it will show on your credit report for the next 7 years or whatever appropriate period is. A bankruptcy will remain on your records for the next ten years.

Tips for debtors

1. First and foremost contact a state attorney and get full details about the credit card debt statute of limitations in your state. Ignorance can cost you a lot.

2. Ensure that your credit card account is not applicable to the statute of limitations in the state in which your creditor is based.

3. Don’t ignore a court notice. It is very important to appear before the judge and notify about the expiry of the statute. Failing to do so may lead you to losing the case, which ideally should have been discarded.

4. Don’t acknowledge the debt as yours. It will lead to the re-aging of the debt. It is best to ignore your debt collectors’ calls. It is a good idea to keep any mails that receive from them as a proof of harassment. If anything, write back to them asking for an explanation or verification.

5. It is very typical for the debt collectors to threaten you saying that they will sue you or pursue you pay up promising the removal of negative information in return. Don’t fall for it.

6. In the recent past there have been a lot of unfair collection methods used by the debt collectors, beyond the expiry of the statute of limitations. Find out about the Fair Debt Collection Practices Act. Ensure that the debt collection methods adhere to this. Lying is another tool that these collectors use and keeping yourself informed is what will guard you against these false methods.

7. Constantly keep a check on whether your creditors are reporting negative information against you. A debt may reflect only for a certain period on your records.

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