A statute of limitations is how long a person or a company has to bring a lawsuit against someone or some thing, such as a corporation or organization, before their right to bring that claim is waived. Statutes of limitations laws effectively restrict how long someone can bring a legal action. The California statute of limitations for consumer credit is generally four years. This is governed by Section 335-349.4 of the California Code of Civil Procedure.
Credit Cards
Under California law, credit card companies only have four years to attempt collection efforts against consumers for their outstanding debts. This includes initiating phone collection, mediation or arbitration, filing a law suit to collect the debt and other collection practices. In most instances, creditors and financial institutions sell the debt to a credit collection service or company.
Medical Debt
Under California law, medical debt --- that is, debt from medical treatment such as a hospitalization ---is limited to four years, which is the same for credit card debt. In California, hospitals can only attempt collections for four years. In most instances, hospitals and other medical institutions will sell the debt to a credit collection service or company.
Credit Reports
Although creditors must cease collection efforts after four years, California law permits the outstanding debt to remain on your credit report for several years. The debt will be listed as "in collections" for up to 7.5 years from the day the account was first delinquent.
Uncollected Debt
The precise date a debt will be discharged through the statute of limitations can be tricky to determine since the discharge date resets and fluctuates anytime you make a payment. For the debt to expire under California's statute of limitations, there would have to be no activity on the account for four years, with no interruptions. Once your credit account expires through this process, the debt is considered "uncollectable," and debtors are no longer obligated to repay it.
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