If you’ve accumulated more credit card debt than you can repay, you need to understand how the law limits the amount of time creditors have to bring a lawsuit against you for that debt. Statutes of limitations (SOL) governing credit card debt offer you some important legal protections. Here is what you need to know about the statute of limitations on credit card debt and how it protects you.
The statute of limitations refers to the time during which debt collectors can sue you for the amount of credit card debt you owe. After the statute of limitations expires, creditors, collection agencies and other interested parties can no longer use a lawsuit to collect the debt. Credit card debt that expires under the statute of limitations is also known as “time-barred” debt.
Once the statute of limitations runs out, it’s still possible to bring a lawsuit against you. But once you show that the debt is older than the statute of limitations, the case is dismissed.
The statute of limitations is often determined by the last time you made a payment on your debt. For example, if you received the original credit card bill five years ago but made your last payment a month ago, the countdown on the statute of limitations starts from that last payment.
Keep in mind that even if the statute of limitations on your debt has expired, that doesn’t mean it is removed from your credit report. If the debt has done a number on your credit score, consider hiring a reputable credit repair agency to help you raise your score. Here is a good list of the best credit repair services.
The statute of limitations varies from state to state. For example, Mississippi has a statute of limitations that lasts three years while Rhode Island’s statute of limitations runs out after 10 years. For most states, the statute of limitations falls in the range of five to six years.
If you move from one state to another, credit card debt can often follow you. That means creditors can sue you in both states. However, issues with jurisdiction and various court challenges have made this a hazy area of the law, and you might end up with a different outcome depending on your own circumstances.
Even after the statute of limitations expires, collection agencies can still harass you to pay your debt. However, they can no longer use the courts to legally compel you to pay after that debt becomes time-barred. Because the statute of limitations has run out, you may be in a better position to send cease-and-desist letters to compel collection agencies or your creditor to comply.
Working with a debt relief company to pay off your debts should stop collection agencies from harassing you with phone calls. See our list of the best debt relief companies to learn more about this option.
If you have already lost a lawsuit involving credit card debt, the statute of limitations no longer applies. If you lose a lawsuit, it means creditors usually have 10 to 20 years to collect the judgment amount in full.
If you think the statute of limitations has expired on your credit card debt, it’s important to watch what you say to debt collectors. In some circumstances, aggressive debt collectors can use your affirmation that you owe money to restart the clock on your debt, even after the statute of limitations expires.
Sometimes debt collectors try to have you promise to make a payment before the statute of limitations runs out. This promise restarts the clock on the SOL, putting you back at square one. If a debt collection agency threatens to sue you for debt after the statute of limitations expires, its action is illegal under the Fair Debt Collection Practices Act.
Ultimately, the statute of limitations offers you some form of consumer protection. You should know the intricacies of this law so you can exercise your rights in a smart and informed manner.
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