Statue of Limitations for Credit Card Debt in the State of Vermont

Statutes of limitations are laws that set a maximum time limit for individuals and businesses to seek compensation for breaches of contracts in a court of law. A debt that exceeds the statute of limitations is referred to as a time-barred debt. The state of Vermont sets the state statute of limitations on credit card debt in Title 9A, Article 3 of the Vermont Statutes.

Time Frame

In the state of Vermont, a credit card company or a debt collection agency can attempt to collect a debt through legal action up to six years after a borrower defaults on payments. In addition, creditors can levy fees on unpaid credit card balances and collect a maximum interest rate of 12 percent annually on unpaid balances, as of February 2011. If a borrower declares bankruptcy, the debtor cannot collect on owed monies, regardless of the six-year statute of limitations, according to the Attorney General of Vermont.

Considerations

To prove that the statute of limitations has caused the debt to expire, a Vermont debtor should keep written records of when they defaulted on their credit card payments. When a creditor takes action against a debtor in a Vermont court, the debtor must prove that the debt is time barred to avoid a judgment in favor of a credit card company or debt collection agency.

Warning

Neither the Fair Debt Collection Practices Act, FDCPA, nor Vermont law forbids a creditor from trying to collect on owed credit card debt past Vermont's six-year statute of limitations. Debt collectors can send letters to the debtor requesting payment for time-barred debt and may offer a reduced settlement or payment plan. If borrowers pay off even a fraction of the debt, they have accepted responsibility for the debt, which resets the statute of limitations. This means that the debt collector can attempt to collect the full amount in court. Per Vermont Attorney General Rule CF 104.05, Vermont debt collectors cannot try to obtain from the debtor a written statement acknowledging his responsibility for a time-barred debt.

Solution

According to the Federal Trade Commission, FTC, borrowers should not discuss time-barred debts with a collection agency. If the statute of limitation passes on a Vermont credit card debt, the debtor should send a letter requesting the collection agency to verify the debt, a process which involves sending the debtor a dated copy of the bill. Debtors can send a stop letter to the debt collector halting all future communications. An individual can sue debt collectors for $1,000 under the FDCPA if the collections representative claims he will sue for a time-barred debt. According to Vermont CF 104, the Vermont Attorney General may charge debtor collectors with fraud if they use dishonest means to try to collect a time-barred debt.