Statute of Limitations for Consumer Debt in Vermont

When a consumer debt can't repay his debts in a timely manner, he may be subject to a creditor's collection lawsuit. If the creditor's lawsuit results in a judgment against the debtor, actions used to collect the debt can include a bank account levy and wage garnishment. However, a creditor must act before the statute of limitations expires. In Vermont, the law generally limits the creditor to six or eight years to collect most consumer debt.

Civil Actions

A creditor's collection action falls under the definition of a civil action in Vermont law. Section 511 of the Vermont Statutes Annotated states that a civil action "shall be commenced within six years after the cause of action accrues." This means that from the date a consumer's account becomes delinquent, the creditor must file his collection lawsuit within six years of that date. If the creditor does not file before the statute expires, the consumer can prevail in the lawsuit by raising the statute of limitations as a defense.

Credit Card Accounts

Consumer debts based on credit card accounts sometimes cause confusion when trying to determine the applicable statute of limitations. This confusion arises from determining whether a credit card account is considered an "open-end account" because it is a series of debits and credits, or an "account based on writing" because it starts with a written application. Some states have different statute of limitation for open-end account and written contracts; however, Vermont law does not make that distinction for purposes of the statute of limitations. All civil actions in Vermont are subject to the six-year limitation period and Vermont courts have applied this limitation period in its case law regarding credit card debts.

Judgments

A creditor's collection lawsuit in Vermont that results in a judgment is also subject to a statute of limitations. Section 506 of the Vermont Statutes Annotated states that "actions on judgments" shall be brought within "eight years after rendition of the judgment." If the eight-year period expires without the judgment being paid, the creditor cannot use the court process to collect the judgment.

Vermont Consumer Protection Rules

Vermont law provides a variety of protections for consumers struggling with debt, including debts that have an expired statute of limitations, sometimes referred to as "zombie debt." Unfortunately, unscrupulous debt collecters may try to collect such debt by unfair means, including deceiving a consumer to reaffirm the old debt to revive the statute of limitations and make a collection lawsuit viable. The Vermont attorney general's office enforces the Vermont Consumer Fraud Rules, which pertain to several consumer-related issues including debt collection. These rules specifically state that the "use of any unfair or unconscionable means" to collect a consumer debt "barred by a statute of limitations" by obtaining a reaffirmation of the debt constitutes an "unfair trade act or practice." The website maintained by the attorney general's offices includes tips on how to deal with debt collectors.