Statute of Limitations on Credit Debt

The statute of limitations on credit debt depends on where you live. It also depends on how creditors and debt collectors classify debts as they attempt to collect unpaid credit card balances. Consumers under pressure to pay old credit card debts may need to seek an attorney's assistance to determine if the debt is collectible under prevailing statutes.

State Statutes

States establish their own statutes of limitations on credit card debt. The statutes cite the amount of time that creditors have to sue consumers to recoup delinquent debts. The state statutes don't release consumers from their obligation to pay their debts. However, the statutes do prevent lawsuits and wage garnishments that creditors might pursue to collect debts. Even so, collection companies and creditors can still contact consumers to urge them to pay old debts even if they can't legally sue them to collect debts because the statute of limitations has expired.

Credit Debt

Credit cards are open-ended accounts because cardholders' credit lines and balances vary. State statutes of limitations on open-ended accounts can be as short as three years as they are in Alabama, Washington, D.C., and Oklahoma. Rhode Island has the longest statute of limitations on open credit card debt at 10 years. Bankrate.com lists the time line for each state's statute for credit card debt on its website. However, you may need to seek an attorney's advice to determine your state's statute on credit debt. That's because credit cards usually come with written cardholder agreements, so creditors may classify them as written contracts. Some state statutes of limitations on written contracts are longer than the statutes on open-ended accounts.

Written Contracts

Kentucky, Ohio and Rhode Island have the longest statutes of limitations on written contracts at 15 years. Delaware, Maryland and North Carolina are among states that have the shortest statutes on written contracts at three years. In any case, the date of last activity on your credit card account determines whether the statute of limitations has run out, preventing lawsuits to collect an unpaid balance. The date of last activity generally is the date that a consumer last charged something to a credit card account or made a payment on the account.

Debt Collection

Consumers have rights against improper debt collection practices under the U.S. Fair Debt Collection Practices Act. A Bankrate.com article titled "Make a Debt Collector Pay You" says the act gives consumers the right to sue debt collectors who try to sue them to collect debts after a statute of limitations runs out. Nonetheless, consumers should appear in court to fight a credit debt lawsuit even if they're certain the statute of limitations has expired. According to the article, a collector could win a lawsuit in such cases and even gain the right to garnish consumers' wages if they don't appear in court to defend themselves.

References

• U.S. Federal Trade Commission; Debt Collection FAQs: A Guide for Consumers; February 2009
• "Bankrate.com"; State Statutes of Limitations for Old Debts; Lucy Lazarony; January 2004
• "MSN Money"; Is There a Statute of Limitations on Debt?; Liz Pulliam Weston; July 2010
• "Bankrate.com"; Make a Debt Collector Pay You; Steve Bucci; April 2011