How to Leverage the Statute of Limitations on Credit Card Debt

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By Rick McBride
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Leverage the Statute of Limitations on Credit Card Debt

Many people are not even aware of its existence, but knowledge is the key to possibly leverage the statute of limitations on credit card debt for your state. Collection agencies only have a certain window of time to file a lawsuit for unpaid credit card debt.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

Knowledge of your state law

Step 1

Educate yourself on your state's time horizon. See the link below for an interactive map with details for each state. The amount of time granted varies widely. As an example, Louisiana's time limit is 3 years but the time imposed on Illinois residents is ten years.
Step 2

Be aware that this reprieve by each state will only benefit a certain subset of debtors. Those with badly damaged credit who are fairly close or over the time limit with no contact from creditors or collection agencies are most likely to benefit. If there is no hope of resolving the debt with a consumer counseling agency, this might be an option. Bankruptcy is another option. It's best to consult a bankruptcy attorney for advice or contact the National Foundation for Credit Counseling. See the link below in the resources section.
Step 3

Repair your credit if you can. Good credit is even more essential now that credit requirements have really tightened. Steer clear of credit repair businesses that promise to wipe away your debt. This is a pie-in-the-sky dream and a scam. Be wary.
Step 4

Collector bugging you?

If you are close to the time limit horizon or even if you are past the time without any contact from the creditor or collection agency, by no means take their calls or contact them in any way. Sending a payment or even promising to do so can start the clock ticking again. Collectors will often lie up one side and down the other denying that the statute of limitation even exists. They can be very creative in getting you to pay. They often buy the debt for pennies on the dollar!