If a credit card company or debt collector contacts you about paying an old credit card debt, double-check the date on which the debt went into default. In Arkansas, as in other states, the statute of limitations may protect you from your creditors getting a court judgment against you. However, your credit remains affected by the default even after the Arkansas' statute of limitations expires.
Statute of Limitations Definition
A statute of limitations on debt is the period of time during which a creditor can successfully sue a debtor to collect on a debt. According to the Bank Rate website, once the statue of limitations has past, the debtor still technically owes the debt, but can defend himself against a lawsuit by arguing that the debt is no longer within the time period specified by the statute of limitations.
Statute of Limitations on Filing a Lawsuit
Arkansas law gives a credit card company or debt collector 3 years to file a lawsuit against you after you default on the credit card. The default date is 6 months from when you stopped making the minimum required payments on the account.
Statute of Limitations on Collecting a Judgment
If a creditor wins a lawsuit against you, Arkansas law gives it 10 years to collect the judgment. If the judgment isn't paid at the end of 10 years, the creditor can ask a judge to renew the statute of limitations. During this time, your creditor can continue collection efforts, and can both garnish your wages and seize your assets to satisfy the debt.
Don't confuse Arkansas' statute of limitations on debt collection with federal credit reporting laws. According to the Fair Credit Reporting Act (FCRA), creditors can place most types of negative information on your report for up to 7 years. A credit bureau can report an unpaid judgment for the longer of 7 years or the length of a state's statute of limitations on judgment collection, according to the Federal Trade Commission.
Some debt collectors will try to sue you for a debt that is past the statute of limitations. If you receive a summons to appear in court, don't ignore it. If you don't show up to defend yourself, the judge can award a default judgment to the debt collector, and an unpaid judgment may show up on your credit report. While you may be able to get the judgment vacated, it is best to avoid the hassle by responding to the summons.