Statute of limitation laws for credit card debt vary by state. These laws regulate the length of time debt collectors have to win court judgments against you. There are no limits on how long debt collectors have to actually file a lawsuit. They can sue at any time, theoretically even decades after you defaulted. However, the judge will automatically dismiss the lawsuit in court if she determines that the debt is beyond the state's statute of limitation for collection.
Timeline
BCS Alliance, a nonprofit consumer information website, reports that, across the nation, statute of limitation laws range from two to 15 years, with the average about six years. That's the length of time debt collectors have to win court judgments against you after you default on the debt. A debt beyond a state's statute of limitation is considered "time-barred" for collection.
Warning
Although they cannot win in court, some debt collectors will file credit card lawsuits after the state's statute of limitation period has expired. The debt collectors are fully aware of the state statutes, but know some people will panic after being served with a lawsuit and will agree to settle out of court. Debt collectors often time telephone calls to the debtor to coincide with the delivery of the lawsuit.
Court Defense
Some people fail to realize that they can appear in court and easily have the case dismissed by informing the judge that the statute of limitation on the debt has expired and the debt is time-barred. BCS Alliance notes that the burden of notifying the court is on the debtor, however. In 2010, Andrew Martin, writing for "The New York Times," wrote about a man who was twice sued for credit card debt that was beyond his state's statute of limitation. On each occasion the man sent handwritten notes to the judge pointing out that the debt was time-barred for collection. The judge dismissed both cases.
Other Tactics
According to Andrew Martin's article, debt collectors will also try other sneaky tactics, including convincing people to make a payment on an old debt, no matter how small. Payment on an old debt restarts the statute of limitation, giving debt collectors several more years to collect or seek a judgment. Attempting to reset the statute of limitation is an important strategy for debt collectors who purchase really old debt. They purchase defaulted credit accounts in bulk, usually for pennies on the dollar. They realize much of the debt is time-barred, but they proceed anyway with trying to lure people into making payments that reset the statute of limitation.
Considerations
Check with your local state attorney general's office to determine the statute of limitation on credit card debt in your state. Avoid discussing old debts over the telephone with a debt collector. In some cases even admitting that the debt is yours can reset the clock. Never make a payment on an old debt unless you intend to pay the account off. If you do intend to pay it you should settle for less than the full balance. Debt collectors will often accept as little as 20 percent of the balance on really old debts.
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