What Is the Statute of Limitations for Collecting Credit Card Debt in Indiana?
To protect individuals from unfair court proceedings, Indiana has a statute of limitations in place on the timeliness of filing a lawsuit. For most individuals, the statute of limitations is pertinent when it comes to debts owed. Credit card debts in Indiana have specific guidelines in regard to the statute of limitations for filing a lawsuit.
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Function
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The purpose of the statute of limitations is to make sure that creditors treat debtors fairly in regard to collecting an alleged debt owed. The statute of limitations sets forth an amount of time in which a creditor can file a lawsuit against a debtor, so that the possibility of a lawsuit does not hang over the debtor's head for the rest of his life and so that the debtor is able to collect proper evidence for his defense in the event of a lawsuit. The statute of limitations begins on the date of the last transaction on a credit card account, including partial payments.
Type of Debt
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Credit cards are "open-ended accounts" or an "open end credit plan." According to U.S. Code, Title 15, Chapter 41, Subchapter I, Part A, Section 1602(i), open end credit plan means, "a plan under which the creditor reasonably contemplates repeated transactions, which prescribes the terms of such transactions, and which provides for a finance charge which may be computed from time to time on the outstanding unpaid balance."
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Significance
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The significance of a credit card debt, as the definition of an open-ended account applies, is that the account continues to accrue finance charges and late fees. If the creditor continues to send credit card statements to a debtor and the balance due continues to increase, this may make the statute of limitations null and void, since the statute of limitations goes into effect on the date of the last account transaction. A court may deem continuing finance charges as transactions.
Time Frame
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The statute of limitations on credit card debt in Indiana is six years from the date of the last credit card transaction, including purchases made with the credit card or partial payments made by the debtor. The final transaction also may include continuing finance charges. This limit of six years to file a lawsuit applies regardless of whether the credit card company or its representative has a credit card contract signed by the debtor as evidence (a credit card statement is sufficient).
Warning
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If a credit card company (or its representative) contacts a debtor prior to filing a lawsuit to attempt to collect funds, it is important that the debtor not acknowledge owing the debt in any way or agree to make payments. By Indiana law, if the statute of limitations runs out but the debtor acknowledges the debt or makes payment on the debt, the statute of limitations starts anew from that date.
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