Credit Card Statute of Limitations FAQs
What does it mean to have a statute of limitations on my debt?
A credit card statute of limitations is the limited time creditors and debt collectors have in order to file a lawsuit to collect their debt.
When does the statute of limitations period begin?
Generally speaking, the credit card statute of limitations begins from when the payment was due. For open-end accounts like credit cards, the statute of limitations begins starting from the due date of the first payment. It may vary by state.
How do you calculate when the credit card statute of limitations has expired?
To find out the deadline for creditors and debt collectors to file suit on a debt, simply add the number of years of the statute to the start time.
Does the credit card statute of limitations eliminate my debt?
No, the statute of limitations only limits what creditors and collection agencies can legally do through the courts after a certain period of time.
Does the statute of limitations eliminate what’s in my credit report?
No. The statute of limitations and the length of time a debt staying on a credit report are not the same thing. A bankruptcy, for example, will remain on a credit report for 10 years regardless of what the statute of limitations is.
Even if a credit card statute of limitations has expired, can a court still rule against me?
Yes. It’s up to you to raise the defense that your debt is older than the statute of limitations. You must add this to your defense against the lawsuit. If you can prove this, you won’t have to pay the debt.
Can debt collectors still attempt to collect the debt after the statute of limitation expires?
Yes. A debt collector can still ask for voluntary payment of an expired debt, even though you cannot be forced by the law to pay the debt. In fact, some may use aggressive tactics such as tricking debtors into acknowledging their debts, which starts the countdown for the statute of limitations to begin again.
So, what should I do when a debt collector calls me for an old debt?
Some experts believe that you should simply ignore calls about ancient debts. You can send them a letter saying that you don’t recognize the debt or to ask them to verify the debt. The main thing to remember is to not say or do anything, whether it’s on the phone or in a letter, which in any way, acknowledges you owe the debt. This also includes making a small payment. In some states, doing so may revive or extend the statute of limitations.
Are there any laws to help me out?
Yes, there is a federal law called the Fair Debt Collection Practices Act (FDCPA). It basically says that debt collectors cannot threaten you with legal action on time-barred debt or debt where the statute of limitations has ended. If the creditor or debt collector knows that the statute of limitations has passed and still sues you, they may have violated the FDPCA. If you’re unsure whether the statute of limitations has passed, you can ask the debt collector, who is required by the FDPCA, to tell you the truth.
Should I know what type of legal debt I have?
Yes, definitely. Your statute of limitation is partially determined by the type of debt you have. There are 4 types of legal debt agreements: a written contract, an oral contract, a promissory note, and credit accounts. A written contract means that you agree to pay on a loan under the terms written in a document that you and your debtor have signed.
Like a written contract, an oral contract means you agree to pay back the money loaned to you by someone. However, this contract is verbal. Verbal contracts are legal but tougher to prove in court.
You also want to determine whether it’s a credit account, and if so, is it open-end or closed-end credit? Open-ended accounts are revolving lines of credit which generally means that you can use it repeatedly. Your payments will vary based on how much credit you’ve used within a particular period of time.
Closed-end credit is generally a single transaction with the number and amount of payments fixed. A good example would be a house or car.
What do the differences between open-end and closed-end credit have to do with the statute of limitations?
A lot actually. The statute of limitations for open-end and closed-end accounts are often different. The statute of limitation for an open-end account is not always clear. There are several states with a unique statute of limitations applied to credit card accounts.
Furthermore, in order get a longer statute of limitations, many creditors try to characterize a closed-end account as open-end. Some creditors may also do this to get away from providing more detailed disclosures needed for closed-end credit.
Is there are a difference between waiving, extending, and reviving the statute of limitations on a debt?
Yes, there are crucial differences between the three especially in terms of how you can be tricked into paying on debt where the statute of limitations has passed. Waiving the statute of limitations on a debt means you give up the legal right use that defense later on. The law makes it hard to accidentally waive your statute of limitations by accident. A court will only uphold the waiver if you knew what you were doing when you waived your statute of limitations on the debt. If you think you’ve waived your statute of limitations, you should still raise that as a defense and force the creditor to prove that you waived it.
Lengthening the statute for a period of time stops the clock, of which there can be multiple reasons. One reason would be having an agreement with the collector and extending your time to pay the debt.
Reviving the statute of limitations basically means you’re starting the entire period again. In some states, making a partial payment or acknowledging a debt you haven’t been paying may cause the statute of limitation to revive. In other states, partial payments just extend it rather than reviving it. You can also revive it through a new promise of making payments. In many states, the promise can be oral while in some, it must be in writing.
Where can I go to learn more about my credit card statute of limitations?
Since the credit card statute of limitations on debt is set by the states, it will depend on what your state law says and what type of debt you have.
You can also research your state laws by going to a local law library, contacting your state consumer protection agency, or doing some research on the internet. This may also be a good time to consult a lawyer. A reputable credit repair company may also help you to fix your bad credit history.