What's the Statute of Limitations on Credit Card Debt?

Jennifer Calonia


Thanks to TV shows like "Law and Order," you might know there's a statute of limitations for criminal charges. What's not as well known, however, is that there's also a statute of limitations on debt.

"Many debts have a statute of limitations, meaning that creditors only have a certain amount of time during which they can take legal action to recoup debt that you owe," says Leslie H. Tayne, debt resolution attorney at Tayne Law Group in New York and author of the money management book "Life & Debt." "However, it's up to you to prove that a debt has passed the statute of limitations, as the court system does not keep track of it."

The duration of the statute depends on which state is identified in the contract or the state you live in, and the type of debt in question. For credit card debt, statute limits are generally between three to six years but can be longer, which is why it's important to know which statute your debt falls under.

[Read: Best Credit Cards for Bad Credit.]


How Your State Affects the Statute of Limitations

Figuring out which statute applies to your credit card debt isn't always straightforward, according to consumer bankruptcy lawyer G. Donald Golden, founding attorney of The Golden Law Group in Florida.

For example, if a debtor lives in Florida and defaults on a credit card debt, a lawsuit will likely be filed in Florida, says Golden. "However, most credit card agreements include a choice of law provision." This provision designates which state laws will apply if there is a dispute under the agreement, and it might not be the same as the state you live in.

Check your original agreement for language specifying a choice of state law or "governing law" that might apply to your debt. Although courts are not bound to this choice, it may impact which statute of limitations that courts may consider in their decision.

Here's a look at the statute of limitations on open-account debt, like credit cards, for each state.

State Statutes of Limitations on Debt

State
Years
Alabama
Three
Alaska
Three
Arizona
Six
Arkansas
Five
California
Four
Colorado
Six
Connecticut
Six
Washington, D.C.
Three
Delaware
Three
Florida
Five
Georgia
Six
Hawaii
Six
Idaho
Five
Illinois
Five
Indiana
Six
Iowa
Five
Kansas
Three
Kentucky
Five
Louisiana
Three
Maine
Six
Maryland
Three
Massachusetts
Six
Michigan
Six
Minnesota
Six
Mississippi Three
Missouri
Five
Montana
Eight
Nebraska
Four
Nevada
Four
New Hampshire
Three
New Jersey
Six
New Mexico
Four
New York
Six
North Carolina
Three
North Dakota
Six
Ohio
Six
Oklahoma
Five
Oregon
Six
Pennsylvania
Four
Rhode Island
10
South Carolina
Three
South Dakota
Six
Tennessee
Six
Texas
Four
Utah
Six
Vermont
Six
Virginia
Three
Washington
Six
West Virginia>
10
Wisconsin
Six
Wyoming
Eight

When Does the Statute of Limitations Start?

It depends on the state law that's used. In some states, the statute of limitations begins from the date of your last payment, while other states say it activates on the date you missed your first payment.

Creditors and debt collectors can file a lawsuit against you to recoup the debt before the statute of limitations expires. When this time frame is over, they can't sue you to collect on delinquent debt. However, they can still contact you to coerce you to pay.

"Some debt collectors who know that your debt has passed the statute of limitations will use especially aggressive tactics to try to trick you into making payments or to saying something which will restart the clock," Tayne says.

What Happens When the Statute Is Over?

An unpaid debt that's passed its statute of limitations becomes "time-barred." Creditors or debt collectors are now legally barred from filing a lawsuit against you to collect payment on the debt.

"This does not mean that you no longer owe the debt or that your credit will no longer be impacted. It simply means that the creditor can no longer sue you," Tayne says. "However, be aware that the clock can restart on the statute of limitations if you make a payment or promise to make a payment on time-barred debt."


[Read: Best Starter Credit Cards for Building Credit.]


How to Avoid Resetting the Clock on Time-Barred Debt

New activity on a time-barred debt account -- such as making a full or partial payment, acknowledging the debt is yours, or promising to pay it -- can restart its statute of limitations.

If you want to avoid the threat of being sued for a time-barred debt, you'll need to avoid taking actions that inadvertently reset a new statute of limitations clock. Here are a few tips that experts recommend if you're contacted about a time-barred debt:

Ask if the debt Is time-barred. The Federal Trade Commission's Fair Debt Collection Practices Act requires a debt collector to respond honestly when asked whether a debt is time-barred. A debt collector can contact you about the debt but might not mention that the debt is time-barred or might choose not to answer you. If the collector confirms it's a time-barred debt, don't acknowledge the debt or agree to pay it.

Ask when the last payment was made. If you're unsure whether the debt is time-barred, a legitimate debt collector should be able to tell you the date the last payment was made. This information helps you determine when the statute of limitations might have begun on the debt.

Request a debt validation letter. Send your debt collectors a written request for a debt validation letter within 30 days of being contacted. A debt validation letter confirms specific information about the collector, the debt and your rights under the FDCPA. The creditor or debt collector is legally required to halt all collections on the debt until it has supplied a debt validation letter in writing.

Again, during this process, it's important to avoid acknowledging that the debt is yours so you don't potentially reactivate the statute of limitations.

Do You Have to Pay a Time-Barred Debt?

"Once a debt has passed the statute of limitations, you cannot be sued or threatened to be sued for your debt," says Tayne. "The decision to pay the debt then falls on you."

When your credit card debt is past its statute of limitations, you have a few options when it comes to handling the actual debt, according to the FTC:

-- Don't pay the debt. If your debt is time-barred and the clock on the statute isn't reset, you can decide to not pay the debt. As a lingering delinquent debt, however, it'll stay on your credit report for seven years from the date of first delinquency before it ages out.

-- Pay some of the debt. Technically, this is an option when addressing a time-barred debt, but it'll reactivate the statute of limitations. Taking this route may lead to further complications down the road if the debt collector chooses to sue once the clock resets.

-- Pay all of the debt. You can choose to repay the debt to avoid prolonged damage to your credit score.

You'll want to know how keeping the ghost of a time-barred debt affects your long-term financial plans. Before making your next move, consider consulting with an attorney or nonprofit credit counselor to talk through your choices and determine which route is best for you.


[Read: Best Credit Cards for Fair Credit.]


Enact Your Rights

Whether your credit card debt is within the statute of limitations or time-barred, if you feel that you're being illegally harassed about the debt, you have options:

-- File a complaint with the FTC. You can submit a complaint to the FTC regarding unfair debt collection practices, such as if the collector threatens to sue you for a time-barred debt.

-- Submit a complaint through the Consumer Financial Protection Bureau. The CFPB works to get you answers and resolve the issue.

-- Reach out to your attorney general's office. You can also report the incident to your attorney general.



Jennifer Calonia is a Los Angeles-based finance writer whose goal is to help readers get excited about improving their financial health and overall well-being. Her work has been featured on Forbes, The Huffington Post, MSN Money and Business Insider. In her spare time, you can find her outdoors, exploring state and national parks.